Only rare-earth miner in U.S. set to go public

The sole miner of rare earths in the U.S. is becoming a public company as trade tensions rise with China, the dominant global supplier of the materials used in everything from computers to cars.

MP Materials, which runs a mine and processing facility in Mountain Pass, Calif., near the border with Nevada, will be listed on the New York Stock Exchange in a deal with Fortress Value Acquisition Corp.

The U.S. has pushed for increased production and the Pentagon began funding development of the Mountain Pass facility earlier this year, according to The Wall

Street Journal.

“This business combination and becoming a public company is a key milestone in MP Materials’ mission to restore the full rare earth supply chain to the United States of America,” said James Litinsky, the head of the Chicago hedge fund JHL Capital group.

Litinsky will become chairman and chief executive officer of MP Materials.

The Journal reported in April that Litinsky first invested in MP Materials believing that the trade-standoff with China would make rare earths more valuable.

“These supply-chain issues are now front and center,” Litinsky said in a prepared statement Wednesday. While the U.S. is now grappling with the coronavirus pandemic, “the industrial policy is just as much of a long-term crisis,” he said.

MP Materials can produce refined neodymium-praseodymium, a rare earth alloy used in magnets that help power electric vehicles, wind turbines, robotics, drones and defense systems.

China currently controls more than 80% of that market. Labor costs and lower environmental standards have led to a flourishing rare earths industry there.

In 2018 China produced some 120,000 metric tons of rare earths, while the U.S. produced 15,000 metric tons, according to the U.S. Geological Survey.

Mountain Pass was once the top global supplier of rare earth minerals, but China began taking over the market in the 1990s as demand surged with the emergence of new technologies such as smartphones.

Mining at Mountain pass was on and off until it closed in 2015 under bankruptcy. It resumed production in 2017 after it was acquired by a group led by Litinsky’s JHL Capital Group.

So-called blank-check companies such as Fortress Value are created solely to find companies to invest in. They raise funds by going public themselves, and then plowing that money into what they see as a promising venture.

MP Materials will have an equity value of approximately $1.5 billion when the deal closes in the fourth quarter. Net proceeds raised from the deal will be used to retrofit and fully recommission the Mountain Pass facility.

MP Materials Corp. will be listed under the ticker symbol “MP.”