(Reuters) -U.S. rare earths producer MP Materials on Thursday reported a steeper-than-expected second-quarter loss due to falling prices for the strategic minerals and operational challenges, although executives forecast a rebound for later this year.

The company, which held unsuccessful merger talks this year with rival Lynas Rare Earths, has struggled in recent months with falling prices and stiff competition from Chinese rivals.

The Las Vegas-based company posted a net loss of $34.1 million, or 21 cents per share, compared to a net profit of $7.4 million, or 9 cents per share, in the year-ago quarter.

Excluding one-time items, MP lost 17 cents per share. By that measure, analysts expected a loss of 9 cents per share, according to IBES data from LSEG.

Shares fell 2.2% $12.40 in after-hours trading.

"We had a very challenging quarter, operationally and financially," MP CEO Jim Litinsky said in a press release.

Litinsky, the company's largest shareholder, said he was "cautiously optimistic" that the company's rare earths production should rebound in the third quarter.

For the past four years, MP has processed rock it extracts from its Mountain Pass mine in California into rare earths concentrate that is shipped to China for refining. The company sold 5,839 metric tons of that concentrate during the quarter, about 43% lower than the year-ago period.

MP has been working to refine its own rare earths for some time. The company said its refining equipment in California produced 272 metric tons of neodymium and praseodymium - the two most in demand rare earths - during the quarter, with 136 metric tons sold.

Litinsky said production of those two rare earths should increase 50% in the third quarter.

The company said it signed a rare earths supply agreement "with a global automaker for a significant volume commitment," without providing details.

(Reporting by Ernest ScheyderEditing by Chris Reese and David Gregorio)