By Melanie Burton
MELBOURNE (Reuters) – Australia’s richest person Gina Rinehart will become a substantial shareholder in Lynas Rare Earths, the largest rare earths producer outside China, a stock exchange filing showed late on Tuesday.
The stake, taken by Rinehart’s privately held Hancock Prospecting, fuels speculation about sector consolidation, after the tycoon stepped up as kingmaker in Australian lithium, and following merger talks between Lynas and the next largest Western rare earths miner, MP Materials, earlier this year.
Lynas shares rose as much as 5.9%.
According to the filing, Rinehart and Hancock Prospecting have become substantial shareholders of Lynas with a voting interest of 5.82%. Hancock has taken a substantial stake in US rare earths producer MP Materials, MP said earlier this month.
Lynas and MP Materials ended discussions about a possible merger in February.
Lynas appreciates the support of its shareholders, but does not comment on individual shareholders, a Lynas spokesperson said. Hancock declined to comment.
“We wonder whether Rinehart’s emergence as a major shareholder in both Lynas and MP will prove a catalyst encouraging a merger,” broker Canaccord said in a note on Wednesday.
“We can imagine clear synergies from such a collaboration: strategic reorientations and cost savings that would increase profitability in a time of subdued prices. A merged entity would also help strengthen a major Western champion in rare earths to counter China’s dominance. “
Lynas mines rare earth metals at the Mount Weld mine in Western Australia, which are shipped to Malaysia for processing. It is building processing facilities in the United States for the highly magnetic metals that are crucial for wind turbines, electric vehicles and rockets.
Lynas investor Andy Forster of Argo Investments said Hancock’s move was interesting “given that she has clearly played a role in the whole space. She obviously wants a seat at the table potentially if there is any chance of consolidation.”
“For her, it’s probably a relatively small investment,” he said. “(Rare earths are) obviously quite depressed lately. If you’re making a long-term strategic investment, this is probably not a bad time to get in.”
Neodymium prices have fallen by almost three-quarters since early 2022, when prices spiked following COVID-era border closures that cut supply to dominant producer China.
Rinehart is Australia’s richest person with a fortune made from iron ore. Hancock has aggressively acquired stakes in lithium miners, thwarting a deal by the largest US producer of lithium chemicals Albemarle (NYSE:) for Australia’s Liontown last year.
More recently she has turned her attention to rare earth elements. Hancock’s investments include a 6.17% stake in Brazilian Rare Earths and a 9.14% stake in Arafura Rare Earths, according to LSEG data.
