Australian tycoon Rinehart takes stake in Lynas Rare Earths

Australia’s richest person, Gina Rinehart, becomes a substantial shareholder of Lynas Rare Earthsthe largest producer of rare earths outside China.

Participation, taken from Hancock ProspectingRinehart’s privately held company is fueling speculation about industry consolidation after the tycoon acted as a kingmaker in Australian lithium, and following merger talks between Lynas and the second largest Western rare earth miner, MP Materialsearlier this year.

The actions of Lynas have increased up to 5.9%. According to the document shown last night, Rinehart and Hancock Prospecting they became substantial shareholders of Lynas with 5.82% voting power. Hancock has acquired a substantial stake in the US rare earth producer MP Materials. Lynas And MP Materials they concluded talks on a potential merger in February.

«We wonder whether the emergence of Rinehart as a major shareholder of both Lynas and MP will prove to be a catalyst that will encourage a merger – said the broker Canaccord in a note – We could imagine clear synergies from such a tie-up: strategic refocuses and cost savings that would boost profitability in a time of low prices. A merged entity would also help consolidate a scaled Western rare earth sample to counter China’s dominance».

Lynas extracts rare earths at its Mount Weld mine in Western Australia which are shipped to Malaysia for processing. He is building processing plants in the United States for the highly magnetic metals that are key to wind turbines, electric vehicles and missiles. The investor of Lynas Andy Forster by Argo Investments said Hancock’s move was interesting as he clearly made a play throughout the space. Obviously he wants to potentially have a seat at the table if there is any possibility of consolidation.

«In the scheme of things for her, it’s probably a relatively small investment – said Forster – Rare earths have obviously been quite depressed as of late. If you’re making a long-term strategic investment, it’s probably not a bad time to get into it. Neodymium prices have fallen by nearly three-quarters since early 2022, when prices surged following Covid-era border closures that limited supply to the dominant producer, China».

Rinehart is Australia’s richest person with a fortune made from iron ore. Hancock has aggressively acquired stakes in lithium mining companies, undercutting a deal by top US lithium chemicals producer Albemarle for Australian Liontown last year. More recently he has turned his attention to rare earths. The investments of Hancock include a 6.17% stake in Brazil Rare Earths a 9.14% stake in Arafura Rare Earthsaccording to data from LSEG.