By Ernest Scheyder
(Reuters) – U.S. rare earths miner MP Materials said on Wednesday it would go public through a merger with a blank-check company backed by private equity firm Fortress Investment Group in a deal valued at $1.47 billion.
The listing on the New York Stock Exchange would be the first for a U.S. rare earths company since Molycorp went public a decade ago. Molycorp filed for bankruptcy in 2015 and MP Materials bought Molycorp’s assets, including California’s Mountain Pass mine, out of bankruptcy in 2017.
The deal comes amidst efforts to resume U.S. production and processing of rare earths, a group of 17 minerals used to build weapons and electronics. China is the world’s largest producer.
Hedge funds JHL Capital Group and QVT Financial will fold their ownership of MP into the special-purpose acquisition company (SPAC) Fortress Value Acquisition Corp <FVAC_u.N>, shares of which gained as much as 20% in Wednesday morning trading. Fortress is controlled by Japan’s SoftBank Group Corp <9984.T>.
SPACs have been behind some recent high-profile public listings, including electric car maker Fisker, which announced its plans earlier this week.
MP will net about $489 million from the deal and a separate stock offering. It plans to use the funds to upgrade outdated Molycorp-era processing equipment in California.
MP ships more than 50,000 tonnes of concentrated rare earths per year to China for processing. Chinese customers account for all of its $100 million in annual revenue.
It was not immediately clear if China’s Shenghe Resources Holding Co Ltd <600392.SS>, which owns about 10% of MP, would participate in the Fortress deal. Shenghe and MP Materials did not immediately respond to requests for comment.
Reuters reported earlier this year that Shenghe’s stake in MP had prompted concern from U.S. government scientists. The Pentagon in April awarded funding to MP but put that decision on hold after the Reuters report and outcry from U.S. senators.
(Reporting by Ernest Scheyder; Editing by Lisa Shumaker)
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