Reviving domestic rare earths production has become a priority in Washington as trade and political tensions between the US and China escalate. The US government is playing a key role in driving the establishment of a domestic rare earths supply chain to reduce reliance on critical materials from China, which dominates the RE market.
JHL Capital Group and QVT Financial have agreed to roll their MP Materials stakes into Fortress Value (NYSE:FVAC), shares in which gained 9.9% on Wednesday, to create a new listed RE company with a pro forma market value of circa $1.5 billion and more than $500 million of net cash.
FVAC's $345 million cash in trust will be supplemented by $200 million of equity investment by institutional investors led by Slate Path Capital, as well as Chamath Palihapitiya and the Omega family office, at $10.00 per share.
MP Materials is expected to deliver about $100 million of revenue and nearly $30 million in estimated adjusted EBITDA in 2020, rising to more than $250 million in 2023, subject to rare earth market conditions improving.
The public company would invest in recommissioning of the Mountain Pass refinery and the pursuit of downstream growth opportunities in the emerging domestic magnetics industry.
New MP Materials board member Richard Meyers said the lack of sustainable, reliable RE supply in North America was a "single point of failure" in national and economic security planning.
Molycorp, the last NYSE-listed RE company, filed for bankruptcy in 2015 and MP Materials bought the Mountain Pass mine and other Molycorp assets in 2017. More than $1.7 billion has been sunk into Mountain Pass over the 70 years since production first started.
The asset is rich in two of the most common REEs, neodymium and praseodymium. It is the most advanced REE project in the US, considering rival projects have not yet broken ground.
