10 Apr, 2024
Mining magnate Rinehart expands rare earths exposure as prices signal recovery
By Anthony Barich
| Gina Rinehart, executive chairman of Hancock Prospecting Pty Ltd., has increased her exposure to rare earths as prices are recovering from a low period. |
Australian billionaire Gina Rinehart has expanded her exposure to rare earths by taking a 5.3% stake in US producer MP Materials Corp. just as prices are picking up from punishing lows.
Rinehart is the executive chairman of Hancock Prospecting Pty. Ltd., which bought 8,783,700 shares in MP Materials on March 28, according to an April 6 filing to the US SEC. The transaction made Hancock the fifth-largest shareholder of MP Materials, according to S&P Global Market Intelligence data.
Hancock has significant interests in lithium and rare earths mines in Australia. It is the largest shareholder in developer Arafura Rare Earths Ltd. with a 9.14% stake, according to Market Intelligence data. The company also has an 18.08% stake in lithium developer Liontown Resources Ltd. and is advancing a joint A$1.7 billion bid with Sociedad Química y Minera de Chile SA for lithium explorer Azure Minerals Ltd.
On April 1, the US government awarded MP Materials US$58.5 million to help build America's first fully integrated rare earth magnet manufacturing facility in Fort Worth, Texas. The facility will have the capacity to produce 1,000 metric tons of neodymium-iron-boron (NdFeB) magnets per year, supporting the production of about 500,000 electric vehicle traction motors, "with room to scale," according to MP Materials.
The plant's raw material inputs will come from Mountain Pass, the US' only scaled and operational rare earth mine and separations facility, in California.
NdFeB magnets are "an indispensable component found in the electric motors and generators that power hybrid and electric vehicles, robots, wind turbines, drones, electronics and critical defense systems," MP Materials said in an April 1 statement. The company expects demand for the magnets to triple by 2035.
Price bounce
A sharp drop in commodity prices resulted, driving the share prices of both Lynas and MP Materials to multiyear lows in March and forcing them to clamp down on costs. But the tide appears to have turned since then.
Rare earths prices have bounced roughly 6% in the last month, "leading to improving sentiment in the sector," Euroz Hartleys said in an April 10 note.
"There are a limited number of advanced projects of scale without critical flaws," the note said.
The neodymium-praseodymium (NdPr) price has recovered 10% since the start of April after dropping to US$47 per kilogram in March, when it was down roughly 70% since its peak in 2022,
"Forecasts are that rare earths prices will strengthen towards the end of 2024 and into 2025, and we should see rare earths pricing for NdPr around about US$80 [per kilogram] to even possibly US$100 [per kilogram] again," Bennett said.
Arafura Rare Earths expects a "structural deficit" in the coming decade, CEO Darryl Cuzzubbo said in March after his company received an A$840 million finance package from the Australian government.
Shanghai Metals Market reported praseodymium and neodymium spot markets strengthening of late.
"At present, the raw material inventory of magnetic material companies is still low. With the price of praseodymium and neodymium already at a low level, there is not much room for further downside," Shanghai Metals Market said in an April 3 report.
Hancock Prospecting declined to comment for this story.