Rare Earths Miner MP Materials of US to Go Public in $1.47 Billion Deal

The US rare earths miner MP Materials will merge with a private equity-backed "blank check" company to be publicly listed at $1.47 billion, underscoring Wall Street's rising interest in efforts to boost production of the strategic minerals. According to a Reuters report.

This will be the first rare earth company listed on the New York Stock Exchange since Molycorp went public 10 years ago. Molycorp filed for bankruptcy in 2015, and MP Materials acquired the Mountain Pass mine in California and other assets of Molycorp in 2017.

MP Materials announced its listing at the time when US President Trump and other US politicians promoted the resumption of domestic production and processing of rare earth elements, a group of 17 minerals used to build weapons and electronics. China is the world's largest producer of these minerals and has threatened to stop its export to the United States.

China owns about 10% of MP shares and is the world's largest producer of rare earths. Hedge funds JHL Capital Group and QVT Financial will merge their MP shares into special-purpose acquisition company Fortress Value Acquisition Corp. The company's stock price rose 20% on Wednesday. The Fortress is controlled by the Japan Softbank Group.

The special-purpose acquisition company is behind some recent high-profile listed companies, including electric vehicle manufacturer Fisker, which announced its listing plan earlier this week.

MP will receive $489 million from this transaction and the separate stock issuance with three other investors. The company plans to use the funds to upgrade California's outdated and sealed Molycorp processing equipment. The company had planned to process 5,000 tonnes per year of the two most common rare earth metals by the end of 2020, though the goal is now by 2022.

MP Materials company is by far the most advanced player in the U.S. rare earths industry, given no rival project has even broken ground. MP's annual revenue of 100 million US dollars all comes from Chinese customers. MP co-chairman Jim Litinsky said that after the company acquired the California plant in 2017, it relied on Chinese expertise to resume operations.

Litinsky will become chief executive of the new company, which will trade under the stock ticker "MP." Retired U.S. General Richard Myers, who chaired the Joint Chiefs of Staff during the George W. Bush presidency, will join the company's board.

It is unclear whether China's Shenghe Resources Holdings Co., Ltd. will participate in the Fortress transaction, which owns about 10% of the MP. Though the conversion likely will give Shenghe an equity holding in the newly formed public company. Shenghe did not respond to a request for comment. MP declined to comment.

At the end of April this year, The US Department of Defense awarded funding for a facility to process heavy rare earths, a less-common type of specialized minerals. But according to a Pentagon document seen by Reuters, that decision was put on hold a few days later pending “further research,” The U.S. Department of Defense awarded funding for a facility to process heavy rare earths, a less-common type of the specialized minerals.

• < Prev
• Next >