NACCO’s Contract Mining Momentum Accelerates with Thacker Pass Lithium Project and Segment Profit Surge

Key Contract Mining Profits and Thacker Pass Project Fuel 2025 Growth

NACCO Industries’ third quarter 2025 results spotlight robust momentum in Contract Mining, bolstered by the company’s exclusive role at Thacker Pass—the largest known lithium reserve in the U.S., owned by Lithium Americas Corp. (LAC) and General Motors. Contract Mining revenues soared to $45.61 million, up 41% year-over-year, while operating profit jumped to $1.93 million from a loss of $0.47 million in Q3 2024. This sharp turnaround comes as NACCO deepens its pipeline of long-term mining contracts, exemplified by new multi-year projects in both construction and critical minerals like lithium.

Contract Mining and Minerals & Royalties Drive Profitable Growth

Improved operational efficiencies, higher demand, and increased tons delivered propelled Contract Mining and Minerals & Royalties to significant year-over-year profit growth. Notably, the Thacker Pass project, managed by subsidiary Sawtooth Mining, is providing stable income during construction and is projected to deliver enhanced long-term cash flow when lithium production starts in late 2027.

Segment Analysis Shows Shifting Strengths Amid Industry Headwinds

While overall Q3 operating profit fell due to a one-time $13.6 million insurance recovery last year, the underlying business showed clear strength. Contract Mining, which saw tons delivered climb from 12,005 to 14,385 year-over-year, now anchors NACCO’s growth strategy. The segment is further buoyed by new contracts, including dragline services for an embankment dam project and its pivotal Thacker Pass involvement.

The Minerals and Royalties segment also posted higher profits—operating profit rose to $7.97 million (up from $6.19 million). These gains were driven by both an equity investment’s improved earnings and higher royalty revenues tied to strong natural gas prices. Looking forward, Minerals & Royalties expects a temporary dip in Q4 profit due to softer commodity prices, but recent acquisitions (like the $4.2 million Midland Basin deal) are setting up growth for 2026 and beyond.

Long-Term Contracts, Prudent Capital Allocation Set Up 2026 Acceleration

NACCO continues to capitalize on the demand for reliable mining and mineral solutions, with long-term contracts providing recurring cash flows and risk mitigation. The company’s $152 million in liquidity as of September 30, 2025, combined with prudent capital investment ($44 million in H2 2025, up to $70 million in 2026), position it for scalable growth in the coming years.

Phase 1 lithium production at Thacker Pass is expected to commence in late 2027, promising long-term, annuity-like income. The company’s recent contract wins and ongoing efficiency initiatives signal that both Contract Mining and overall EBITDA could see further gains in 2026, despite short-term industry challenges.

What Should Investors Watch Next?

While NACCO anticipates lower 2025 full-year profits (due to prior-year insurance gains and a non-cash pension settlement), momentum from operational improvements and diversified contracts point toward a 2026 rebound. The continued buildout at Thacker Pass, a major U.S. lithium hub, along with expanding roles in oil and gas royalties, suggest the company is leveraging macro trends in electrification and energy security.

For those following lithium and mining equities, NACCO’s strategic exposure at Thacker Pass—serving industry giants like LAC and General Motors—could make the coming quarters worth close attention.

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