Shares of Molycorp jumped as much as 17 percent on Friday after the rare earth producer's quarterly earnings beat expectations and one of its business partners announced a new supply agreement.

Hitachi Metals Ltd said in a release that it had entered into a master supply agreement with Molycorp to secure access to the raw materials for its neodymium magnets.

But the Japanese company backed away from a previously announced joint venture with Molycorp to produce alloys for neodymium magnets. Instead, Hitachi Metals said it is considering its own U.S. manufacturing project.

In a separate release, Molycorp said it is still committed to its mine to magnets strategy, which will allow the Colorado-based company to capture more value from its rare earths.

We have been in advanced discussions with other companies regarding magnet joint venture opportunities for some time, said Molycorp Chief Executive Officer Mark Smith in the release.

Shares of Molycorp were up 9.5 percent at $59.31 by mid-afternoon on the New York Stock Exchange, after rising as high as $63.59.

Under the new three-year deal, Molycorp will supply Hitachi with didymium metal and alloy, as well as lanthanum oxide.

Rare earth oxide and metal prices have spiked as China, which produces some 95 percent of the world's supply, has repeatedly clamped down on exports.

This has left Japanese companies scrambling to secure reliable supplies of rare earths, which are used in a range of high-tech products from smartphones to hybrid cars.

After the market closed on Thursday, Molycorp reported second-quarter earnings of 52 cents a share, beating analyst expectations of 40 cents a share, according to Thomson Reuters I/B/E/S.

(Reporting by Allison Martell; editing by Rob Wilson)