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.