US rare earths miner MP Materials to go public in US$1.47b deal

[WASHINGTON] US rare earths miner MP Materials said on Wednesday it would go public through a merger with a blank-check company backed by private equity firm Fortress Investment Group in a deal valued at US$1.47 billion.

The listing on the New York Stock Exchange would be the first for a US rare earths company since Molycorp went public a decade ago. Molycorp filed for bankruptcy in 2015 and MP Materials bought Molycorp's assets, including California's Mountain Pass mine, out of bankruptcy in 2017.

The deal comes amidst efforts to resume US production and processing of rare earths, a group of 17 minerals used to build weapons and electronics. China is the world's largest producer.

Hedge funds JHL Capital Group and QVT Financial will fold their ownership of MP into the special-purpose acquisition company (SPAC) Fortress Value Acquisition Corp, shares of which gained as much as 20 per cent in Wednesday morning trading. Fortress is controlled by Japan's SoftBank Group Corp .

SPACs have been behind some recent high-profile public listings, including electric car maker Fisker, which announced its plans earlier this week.

MP will net about US$489 million from the deal and a separate stock offering. It plans to use the funds to upgrade outdated Molycorp-era processing equipment in California.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

MP ships more than 50,000 tonnes of concentrated rare earths per year to China for processing. Chinese customers account for all of its US$100 million in annual revenue.

It was not immediately clear if China's Shenghe Resources Holding Co, which owns about 10 per cent of MP, would participate in the Fortress deal. Shenghe and MP Materials did not immediately respond to requests for comment.

Reuters reported earlier this year that Shenghe's stake in MP had prompted concern from US government scientists. The Pentagon in April awarded funding to MP but put that decision on hold after the Reuters report and outcry from US senators.

REUTERS