Gina Rinehart-backed Lynas to buy rare earths miner Meteoric

Lynas Rare Earths, Australia's largest rare earths producer outside of China, is set to acquire Meteoric Resources, a Brazilian miner, in a deal valued at roughly A$968 million (US$670 million). The acquisition will grant Lynas access to a new source of critical minerals in Brazil, a country increasingly becoming a potential supplier of rare earths as the US pushes for global supply chain diversification away from China.

The deal sees Lynas offering 0.0207 shares for every one share in Meteoric, which has seen its stock price surge by 47% on Wednesday, bolstering its market capitalization to around A$727 million. Lynas currently operates in both Australia and Malaysia, processing rare earths used in permanent magnets for various applications, from military equipment to smartphones.

Analysts at William Blair & Co. view the acquisition as a solid complement to Lynas' existing operations but noted that further integration work will be required to commence production at the new Brazilian asset. The Brazilian project, known as Caldeira, is one of the world's largest rare earth deposits, offering the potential to produce 127 tonnes annually of dysprosium and terbium, two essential "heavy" rare earths in high demand.

While Lynas plans to initially send Brazilian feedstock to its Malaysian separation facilities, the company is also exploring the construction of downstream facilities in Brazil in the longer term, potentially expanding its reach into the Western Hemisphere market. Lynas vice-president Daniel Havas stated that the company will explore feeding the Western Hemisphere market from Brazil and its existing supply chains in Malaysia.

The acquisition requires approval from Brazil's government, with President Luiz Inacio Lula da Silva recently endorsing a bill to enhance government oversight of mining transactions and promote domestic processing. A presidential election is also slated to take place in Brazil, adding an additional layer of complexity to the approval process. Both Lynas and Meteoric retain the option to terminate the deal if Brazilian authorities reject the change of control.