Lynas Rare Earths has confirmed the company has been in conversation with its US rival MP Materials for a potential merger.
The Australian Financial Review (AFR) reported that Lynas founder Nick Curtis was in favour of a mega-merger between the companies with the aim of rivalling China’s dominance in the sector.
Lynas released a statement in response to the AFR’s speculation saying discussions between the rare earths producers had taken place, but that a deal was unlikely to materialise.
“Lynas confirms it has held confidential discussions with MP Materials Corp regarding a potential transaction, however, these discussions are not ongoing,” the company said.
“Lynas is implementing a strong organic growth plan. In addition, Lynas continues to seek opportunities to use our proven expertise to build scale, improve market functioning and add value for shareholders.”
The AFR said merger-talks were floated in response to a slump in the companies’ trade prices over the last 12 months as global rare earth prices have softened.
New Chinese restrictions on trade have also had an impact, as China banned the export of rare earth extraction and separation technologies late last year in a bid to solidify its dominance in the sector.
According to the AFR, Curtis said a merger between Lynas and MP Materials would have the scale needed to challenge that dominance.
“It would also give more confidence to customers like the big [original equipment manufacturers] about Western world supply,” he said.
Lynas and MP Materials are the leading producers of rare earths outside of China, valued at $5.3 billion and $4.4 billion respectively.
Lynas holds a mine in Western Australia and a processing plant in Malaysia, while MP Materials operates in the Californian mountain pass.
Though Lynas said merger discussions were not ongoing, the company has not yet ruled out a deal in the future that would see the creation of a rare earths behemoth capable of toppling China’s reign.
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