A consolidation of Wyoming’s rare earths strategic minerals industry might be right around the corner.
While nobody’s saying anything for sure, regulatory filings across the globe seem to hint something may be brewing.
The rare earth minerals bonanza is the result of consumers starved for magnet metals integral to the green transition to electric vehicles, wind turbines, consumer goods, robots and military drones, missiles and chips needed for sophisticated computing power.
Earlier this month, the consolidation possibilities were sparked when Australian billionaire Gina Rinehart’s Hancock Prospecting Pty Ltd took a 5.3% stake in U.S. rare-earths producer MP Materials Corp. in Las Vegas.
The stake represents about 8.8 million shares of MP’s 178 million outstanding shares.
Rinehart’s move is significant to Wyoming because the mining magnate with a fortune of more than $30 billion and the richest person in Australia, seems to be clearly making a move to consolidate rare earths, and has even made a play in the related lithium field.
Lithium is a key metal used in electric vehicle batteries.
Hancock not only took the MP stake, but also became a major shareholder this month in Australian-based Lynas Rare Earths, the largest producer of rare earths outside of China.
A Hancock spokesman was not immediately available for comment on why the sudden interest in rare earths.
This month’s news involving Rinehart’s ownership positions in Lynas and MP comes on the heels of Lynas ending discussions on a potential merger with MP in February.
There are growing national security concerns in the United States of the dominant rare earths position that China holds in the world. The International Energy Agency says the Asian nation could control upward of 70% to 80% of the market.
The next biggest rare earths producer behind China is Lynas, followed by the sole producer in the United States, MP, which has close ties with the U.S. military and has a Chinese distributor that is a minority shareholder.
MP spokesman Matt Sloustcher confirmed that Rinehart’s Hancock business became a recent shareholder but declined to comment on speculation regarding a rare earths consolidation move by Rinehart.
“She’s a shareholder. That’s public information,” he said.
Wyoming Building Share
A number of companies are developing rare earth mines and processing in Wyoming and have licenses to mine for the strategic mineral on each of their respective turfs in the state.
There are several rare earths names in Wyoming, but Lexington, Kentucky-based Ramaco Resources Inc., Colorado-based Rare Element Resources Ltd. and Australia-based American Rare Earths Ltd. have boasted huge rare earth finds — possibly the biggest in the world.
Rare Element Resources wants to complete a rare earth minerals demonstration factory in Upton, Wyoming, this summer.
In the past week, American Rare Earths turned down a $400 million takeover offer to sell off its Wyoming unit.
The company, which recently indicated that its rare earth minerals project near Wheatland could need an infusion of $456 million to begin mine development and production, rejected the buyout offer from a group of investors from California.
The Wheatland-area mine could be one of the richest rare earths deposits in the world with an estimated 2.34 billion tons of rare earth minerals.
The offer to buy the Wyoming business was made by Papaya Growth Opportunity Corp. I, a special purpose acquisition company (SPAC) based out of Oakland, California, and underscores the kind of value American Rare Earths may have on its hands.
SPACs are essentially a corporate shell through which investor money is raised via a public offering. Shares in the companies tend to trade around their IPO prices, at least until there’s some movement to buy a company and take it public. A SPAC has anywhere from 18 months to two years to do an acquisition — and in some cases can get an extension to do a deal.
Won’t Part With It
In its statement rejecting the officer from Papaya, American Rare Earths said that it is aware of the “potential benefits” of the SPAC offer, especially since this was the same path pursued by larger rival MP.
MP Materials owns and operates the Mountain Pass mine, the only operating rare earths mine and processing facility in the United States. Mountain Pass is located in the Mojave Desert in southeastern California.
MP went public in a $1.47 billion deal by merging with a SPAC in July 2020.
Ramaco in northeast Wyoming said last month that its rare earths deposit find in the Cowboy State was estimated at more than 1.5 million tons underground, and the value could approach more than $37 billion because of the inclusion of Chinese minerals banned for shipment to America.
The deposit in the coal-rich Powder River Basin is already considered one of the world’s largest deposits of rare earth minerals.
Ramaco, which is pursuing potential pilot production and commercialization at its Brook Mine deposit, is considering collaboration with a university, and governmental and other research institutions to explore “unconventional processing techniques,” according to Ramaco Chairman and CEO Randal Atkins.
Pat Maio can be reached at pat@cowboystatedaily.com.
