Acquisition of Meteoric Resources could strengthen heavy rare earth production outside China.
Rare earth producer Lynas is looking to expand its resource base and plans to acquire Meteoric Resources (PDF). The fellow Australian company controls the Caldeira project in the Brazilian state of Minas Gerais. It is one of the largest known ionic adsorption clay deposits. In these deposits, rare earth elements are largely bound to clay minerals and can be extracted more easily. They also tend to contain relatively high concentrations of heavy rare earth elements such as dysprosium and terbium. Production of these elements is currently heavily concentrated in China.
Material mined at Caldeira would be processed at Lynas’ existing refinery in Malaysia. The company also plans to assess whether certain processing stages could eventually be located in Brazil.
This would fit well with Brazil’s new critical minerals policy. The country aims to expand domestic processing and further refining of critical raw materials and create additional funding and financing instruments to support such projects. In doing so, South America’s largest economy hopes to benefit more from its mineral wealth, as processed materials generally command higher revenues than unprocessed raw material exports.
Several Parties Interested in Caldeira Material
Lynas plans to acquire Meteoric in an all-share deal valued at around US$670 million. The agreement has already been signed but still requires approval from Meteoric shareholders, a court and the relevant Brazilian authorities.
Parts of the planned production have already attracted several potential buyers that are working to establish non-Chinese rare earth supply chains, including Neo Performance Materials, Ucore Rare Metals and Posco. Caldeira has also attracted interest on the financing side: In addition to the Export-Import Bank of the United States, Meteoric says it is in talks with Brazilian and US development finance institutions as well as other strategic investors.
The planned offtake arrangements are currently only memoranda of understanding rather than final, binding contracts. It therefore remains unclear whether, and in what form, these agreements would be implemented following a takeover by Lynas.
Featured image: via Canva
