Hancock Prospecting sets sights on rare earths

Company News

by Glenn Dyer

After spending billions to secure an overpriced position in lithium, Gina Rinehart and her company, Hancock Prospecting, are now setting their sights on rare earths. Their latest move involves acquiring a stake in Lynas Rare Earths (ASX:LYC), the largest miner of this crucial material outside of China.

Last week, it was revealed that Hancock and Rinehart had amassed a $212 million stake in the US rare earths group, MP Materials. This is the same company that Lynas Rare Earths approached earlier this year for a merger, only to be turned down.

On Tuesday evening, well after the market had closed, Hancock and Gina Rinehart emerged as significant shareholders in Lynas Rare Earths after a $49 million raid on the company over the past week or so. Hancock Prospecting disclosed owning a 5.82% stake in Lynas, sparking speculation that Rinehart could play a major role in renewed merger talks between Lynas and MP Materials.

Lynas shares ended Tuesday at $6.09, a decrease of just under 1%, marking a 15% decline for the year to date. Shares in MP Materials also fell by 0.9% on Tuesday.

This move on Lynas brings to mind Rinehart's previous endeavor, where she spent $1.2 billion to acquire a blocking stake in the lithium group Liontown Resources. This action prevented other shareholders from accepting a $3 per share offer from the US giant Albemarle. However, given that she paid around $3 per share for her 19% stake, Rinehart is now facing a massive loss, with Liontown shares trading at $1.18 on Tuesday's close.

Albemarle emerged victorious in this scenario, avoiding the need to spend $A6.6 billion in cash to acquire Liontown. This move shielded the company from significant financial pressure during the downturn in lithium prices and the subsequent sell-off that occurred during the bid process, further exacerbated by Rinehart's company's raid.

Hancock and Rinehart also thwarted a bid for Azure Minerals, which owns 60% of a highly prospective lithium prospect in the Pilbara. SQM, the Chilean lithium giant, had been pursuing Azure Minerals and launched an offer. Hancock countered by building a potentially blocking stake. After a brief standoff, the two companies collaborated to make a $3.70 per share offer for Azure. While this values Azure at $1.1 billion, considering the collapse in the Liontown share price, the actual current market value would likely be a third of that figure.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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