This strategic move is intended to pose a challenge to China’s dominant position in the strategically crucial rare earths sector.
Mr. Curtis has emphasized the industrial and strategic rationale behind a potential merger between Lynas Rare Earths and MP Materials. Recent reports revealed discussions between the two companies, marking the world’s two largest non-China producers of rare earths. While Lynas confirmed the talks, it clarified that they are not currently ongoing. It was reported that Lynas initiated the discussions, contemplating a cash-and-scrip offer for MP Materials.
The significant corporate development for Lynas, following the thwarted takeover attempt by Wesfarmers in 2019, coincides with the U.S. contemplating tax incentives for downstream investment in the rare earths sector. Lynas, led by Amanda Lacaze, did not dismiss the possibility of a future deal, indicating the company’s strategic intent to enhance its scale in the supply of essential rare earth materials for defense and various industries.
“Lynas acknowledges that it engaged in confidential discussions with MP Materials Corp concerning a potential transaction; however, these discussions are no longer ongoing,” stated the company over the weekend. It emphasized its commitment to a robust organic growth strategy and expressed a continual pursuit of opportunities to leverage its expertise for building scale, enhancing market functionality, and delivering value to shareholders.
The discussions with MP Materials occurred amidst a decline in prices and increased trade restrictions imposed by China. In December, China prohibited the export of rare earth extraction and separation technologies, aiming to safeguard its dominant market position. The country had previously issued threats of cutting off supply to the United States and its allies. MP Materials did not provide comments on the matter over the weekend, and its share price experienced a 6.5% surge in New York trading on Friday.
The American company holds a market capitalization of $2.87 billion, while Lynas, valued at $5.3 billion, has experienced a significant decline in its share price over the last 12 months due to reduced pricing for rare earths materials. Nick Curtis emphasized that a merged entity would attain the necessary scale to pose a challenge to China’s market dominance.
“It would also instill greater confidence in major original equipment manufacturers (OEMs) regarding the supply from the Western world,” he commented.
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