MP Materials to become public company in $1.5 billion deal

July 16, 2020

MP Materials, the owner and operator of the Mountain Pass rare earths mine in California announced that it will merge with Fortress Value Acquisition Group in a deal valued at $1.47 billion to become a publicly traded company listed on the New York Stock Exchange.
The deal comes as the United States is pushing for increased production of rare earth elements to decrease its dependence on China for the material. Earlier this year, the Pentagon began funding development of the Mountain Pass mine and processing facility, 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 who will become the chairman and CEO of MP Materials. “The Fortess team shares our vision that having a Western champion in rare earth magnetics is essential for the onshoring of jobs, national security and a carbon-reduced future. To achieve our mission we must be economically competitive and hold ourselves to the highest standards for the benefit of our investors, employees, communities, country and the environment.”

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

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

In 2018, China produced some 120 kt (132,000 st) of rare earths, while the U.S. produced 15 kt (16,500 st), 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 like smart phones.

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.

Blank-check companies like 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, the Associated Press reported.

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."

 

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