Rinehart’s New Attack On China’s Rare Earth Dominance

Australian iron ore billionaire Gina Rinehart has revealed a 5.82% stake in Lynas Rare Earths, lifting the lid a little on her plan to become the key player in a western world response to China’s dominance of critically important technology metals.

The Lynas interest matches a 5.3% holding in the U.S. rare earth miner, MP Materials, she reported earlier this month.

It was the move on MP which prompted my April 9 story, which focused on what looks like the first steps in a joint Australia/U.S. move aimed at breaking China’s grip on rare earths production.

Rinehart’s move on Lynas was reported to the Australian stock exchange late yesterday in an initial substantial shareholder notice.

That filing revealed that Rinehart and her family company, Hancock Prospecting, started buying Lynas shares just before last Christmas with an initial investment of $1.6 million and the latest investment yesterday of $26 million which lifted her Lynas position over the 5% substantial shareholder reporting threshold.

MP, which operates the Mountain Pass rare earth mine in California and Lynas, which operates the Mt Weld mine in Western Australia, are two of the biggest suppliers of metals such as Neodymium and Praseodymium to the global rare earth supply chain.

Perfect Fit

A combination of the two assets would make a perfect fit with there capacity to supply more than 25% of the global market for rare earths.

Talks were held earlier this year aimed at merging MP and Lynas but ended without a deal.

Negotiations could be restarted given Rinehart’s obvious interest in building a big rare earth business to complement her iron ore operations which generate the lion’s share of her cash and forms the basis of her $30 billion fortune.

Rinehart’s plans for her growing rare earth interests have not been spelled out but it is significant that she now has an interest in four companies which are either producing or exploring for the metals which make the best permanent magnets used in electric vehicles as well as being essential in rocket guidance systems.

Along with the investment in Lynas and MP, Rinehart has a 10% interest in Arafura Rare Earths which is planning to develop the Nolans project in Australia’s Northern Territory and a 5.8% in a Brazilian rare earth company.

It is perhaps even more significant that both Lynas and MP are developing rare earth processing facilities in Texas with those plants being designed to displace Chinese finished products from the rare earth supply chain.

Both Lynas and MP have struggled to survive during bouts of low prices for rare earths caused, perhaps deliberately, by Chinese over production designed to dissuade competition.

Twin Rescues

MP was rescued from insolvency in 2018. Lynas was rescued in 2017 by an injection of funds from companies closely allied to the Japanese government which had become concerned about over-reliance on China’s supplies of critical metal.

Rinehart, according to the Australian Financial Review newspaper, is “on good terms” with Amanda Lacaze, chief executive of Lynas.

With her foot on substantial shareholdings in the western world's two major rare earth miners, and stakes in two explorers, Rinehart is well positioned to orchestrate the mining merger suggested here earlier this month.