First rare earth firm in decade to go public in $1.5 billion deal

The MP Materials mine, formerly Molycorp Minerals, in Mountain Pass, CA. Credit: Summerlin540 | Flickr

US rare earths miner MP Materials will go public in a $1.47 billion deal by merging with a private-equity backed blank-check company, underscoring Wall Street’s rising interest in efforts to boost US production of the strategic minerals.

The listing on the New York Stock Exchange would be the first for a U.S. rare earths company since Molycorp went public a decade ago. Molycorp filed for bankruptcy in 2015 and MP Materials bought California’s Mountain Pass mine and other Molycorp asset in 2017.

MP plans to process 5,000 tonnes per year of the two most common rare earth metals by 2022

The deal, announced on Wednesday, comes as President Donald Trump and other U.S. politicians push to resume domestic production and processing of rare earths, a group of 17 minerals used to build weapons and electronics.

China, which owns about 10% of MP, is the world’s largest producer of these minerals.

Hedge funds JHL Capital Group and QVT Financial will fold their ownership of MP into the special-purpose acquisition company (SPAC) Fortress Value Acquisition Corp, shares of which gained as much as 20% in Wednesday trading. Fortress is controlled by Japan’s SoftBank Group Corp.

SPACs have been behind some recent high-profile public listings, including electric car maker Fisker, which announced its plans earlier this week.

MP will net about $489 million from the deal and a separate stock offering with three other investors. It plans to use the funds to upgrade outdated and mothballed Molycorp-era processing equipment in California.

MP 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, the company said on Wednesday.

MP is by far the most advanced player in the U.S. rare earths industry, given no rival project has even broken ground. But the company has to ship more than 50,000 tonnes of concentrated rare earths per year to China for final processing because its California equipment is not operational. Chinese customers account for all of MP’s $100 million in annual revenue.

MP relied on Chinese expertise to resume operations at its California site after buying it in 2017, according to Jim Litinsky, the company’s co-chairman.

Litinsky will become chief executive of the new company, which will trade under the stock ticker “MP.” Retired U.S. General Richard Myers, the former chairman of the Joint Chiefs of Staff, will join the company’s board.

It was not immediately clear if China’s Shenghe Resources Holding Co Ltd, which owns about 10% of MP, would participate in the Fortress deal. Shenghe and MP Materials did not immediately respond to requests for comment.

Reuters reported earlier this year that Shenghe’s stake in MP had prompted concern from scientists at the U.S. Department of Energy’s Critical Materials Institute, the focal point of the U.S. government’s rare earths research and a facility that typically works closely with private industry.

The U.S. Department of Defense awarded funding in late April to MP for a facility to process heavy rare earths, a less-common type of the specialized minerals.

But that decision was put on hold a few days later “until further research can be conducted,” according to a Pentagon document seen by Reuters.

(By Ernest Scheyder; Editing by Lisa Shumaker)

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