Failed bid for Lynas shows rare earths race is on

Australian retail and mining conglomerate Wesfarmers has announced that it will not pursue a previously announced $1.5 billion bid for Lynas Corp.

Lynas is currently the world’s largest non-Chinese producer of rare earth metals, producing 13% of the global supply of these elements, which are widely used in electronic devices and defense equipment.

Wesfarmers’ March 2019 offering price, which valued Lynas at $2.25 per share, proved too low as U.S./China trade tensions boosted demand for alternate sources of rare earth elements, driving Lynas’ share price above the bid.

The move comes as the Trump Administration has escalated demand for extraction and refining efforts for rare earth metals by amending the terms of the Defense Production Act in July. The designation of Light Rare Earth Elements as essential to U.S. national defense has sparked a race to develop separation and refining facilities.

While U.S. President Trump’s recent controversial bid to buy the sovereign nation of Greenland from its former colonizer, Denmark, raised eyebrows worldwide, it may have been motivated by an urgency to access the island’s mineral reserves. Greenland is believed to have 38.5 tons of rare earth oxides, equivalent to nearly a third of the known rare earth oxides in the rest of the world.

In June of this year, the U.S. State Department and Greenland Ministry of Mineral Resources and Labor signed a memorandum of understanding to cooperate on mineral sector governance, an agreement which would include surveying activities for rare earth elements in Greenland’s southwestern Gardar Province.

This weekend’s South China Morning Post profiled a bid by USA Rare Earth to develop a processing plant in Hudspeth County, Texas, Round Top, that would produce 15 of the 17 rare earth elements.

Meanwhile, MP Materials is aiming to become the first U.S. company to refine rare earths since the 2015 bankruptcy of Molycorp Inc., which previously owned the California-based Mountain Pass Mine that now hosts MP Materials. According to Reuters, the MP Materials facility is already producing 68% more rare earth concentrate than was the case under Molycorp’s management.

Rare earth elements are used as components in electronic devices including smart phones, digital cameras, flat screen televisions and computer monitors, as well as defense and energy technologies.