Australia’s Hancock Prospecting buys stake in US rare earth miner MP Materials

Hancock Prospecting's recent acquisition of a 5.3% stake in MP Materials has ignited widespread curiosity about its potential impact on the rare earths market

The purchase of a stake in MP Materials by private mining and agricultural firm Hancock Prospecting, owned by high-profile Australian investor Gina Rinehart, has sparked intense speculation about the plans of the largest rare earths producer in the US.According to a regulatory filing dated April 5, Hancock has purchased a 5.3% stake in MP Materials. Neither firm has commented publicly, which is further fueling industry speculation.

Several unconfirmed reports have suggested that this transaction increases the chances of merger discussions restarting between MP Materials and Australian rare earths major Lynas Rare Earths. But according to an industry expert, “the stake is not big enough yet to influence a decision of that magnitude.”

This is not the first investment in rare earths by Hancock, which also has substantial holdings in the lithium space. It owns stakes in two Australian junior miners – 10% of Arafura Rare Earths and 5.85% of Brazilian Rare Earths.

“The wide-ranging nature of these [rare earth] acquisitions makes it unclear to people where the final target actually is,” Christopher Ecclestone, principal at mining consultancy Hallgarten, told Fastmarkets.

“This move is more opportunistic than strategic, coming just at a time when commodity prices in the electric vehicle space – lithium and rare earths – may be close to the bottom,” Constantine Karayannopoulos, strategic adviser and former chief executive officer of Neo Performance Materials, told Fastmarkets.

Nevada-headquartered MP Materials is one of the largest rare earth mining companies in the world. In 2023, it produced concentrate containing 41,557 tonnes of rare earth oxides at its Mountain Pass mine in California and began to ramp up initial production of separated rare earth products.

MP is developing a fully integrated supply chain to produce high-performance sintered neodymium iron boron (NdFeB) magnets for motors of electric and hybrid cars.

MP concluded a binding long-term supply agreement two years ago with US carmaker GM for its future magnet output.

And last week, the US government awarded MP with a $58.5 million 48C investment tax credit under the Inflation Reduction (IRA). This type of tax credit is used to provide funds to cover a portion of the upfront capital costs of new energy and critical mineral processing projects.

Over the past two years, MP has received $45 million in US Department of Defense grants for the development of light and heavy rare earth processing capacity in the US.

Chinese rare earth prices have collapsed by 70% over the past two years, putting huge pressure on the margins of miners and producers all around the world, Fastmarkets understands. Profits have plunged for all the major rare earth producers. MP posted full-year 2023 profit of $24.3 million, down from $289 million in 2022.

Fastmarkets’ weekly price assessment for neodymium-praseodymium oxide 99% ratio (75:25), fob China price was $52-54 per kg on Thursday April 11, up from $51-53 per kg on April 4.

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