Gina Rinehart, Australia’s wealthiest individual, has emerged as a substantial shareholder in Lynas Rare Earths, the largest producer of rare earths outside of China, as indicated by an exchange filing late on Tuesday. The stake, acquired through Rinehart’s privately held Hancock Prospecting, has prompted speculation of potential sector consolidation, following the magnate’s influential role in the Australian lithium market and previous merger discussions between Lynas and the next largest Western rare earths miner, MP Materials.
Lynas shares experienced a significant increase of up to 5.9% in response to this development. The filing revealed that Rinehart and Hancock Prospecting now hold a substantial stake in Lynas, possessing 5.82% voting power. Earlier this month, Hancock also acquired a substantial stake in the U.S. rare earths producer MP Materials.
While talks between Lynas and MP Materials regarding a potential merger concluded in February, broker Canaccord highlighted the potential for Rinehart’s involvement to catalyze discussions of a merger, citing potential synergies, strategic re-orientations, and cost savings that could enhance profitability amidst subdued prices. Furthermore, a merged entity could bolster a scaled Western rare earths champion to counter China’s dominance in the sector.
Lynas, which mines rare earths at its Mount Weld mine in Western Australia and processes them in Malaysia, is also expanding its processing facilities in the United States. These rare earths are crucial components for wind turbines, electric vehicles, and missiles.
Lynas investor Andy Forster of Argo Investments noted that Hancock’s move is intriguing, particularly given Rinehart’s broader strategic play across the sector. He emphasized the potential for sector consolidation and the significance of Rinehart’s entry at a time when rare earths prices have been relatively depressed, presenting a strategic long-term investment opportunity.
Rinehart, known for her fortune in iron ore, has been actively acquiring stakes in lithium miners and interfered with a deal between top U.S. lithium chemicals maker Albemarle and Australia’s Liontown last year.