Article by Adrian Rauso, courtesy of The West Australian
Australia’s richest person, Gina Rinehart, added about $137 million to her net worth in less than 24 hours from rare earth companies that stand to capitalise on carmakers feeling the pinch of Chinese export restrictions.
Shares in Lynas Rare Earths on Thursday closed at their highest point in more than two years after European auto parts manufacturing plants suspended output and the likes of Mercedes-Benz consider ways to protect against shortages of rare earth elements, according to a Reuters report overnight.
China in April banned the exports of a wide range of rare earth element products, which are required to make specialised magnets found in modern cars and trucks.
These magnets are used to keep anti-lock braking systems and electronic tracking systems in place when a motor vehicle moves.
China produces about 90 per cent of the world’s rare earths and is using the export controls to boost its own manufacturing sector amid trade tensions with the United States and European Union.
Perth-based Lynas Rare Earths and the Las Vegas-based MP Materials are the only two rare earth producers of note with operations beyond Chinese borders.
They both stand to benefit from the expected increase in demand from European carmakers for non-Chinese sources of rare earth materials.
Shares in Lynas finished 12.5 per cent higher to $9.26 — heights not experienced since February 2023 — while New York-listed MP surged 11.7 per cent during trade overnight.
Lynas’ key assets are a mine in WA and refinery in Malaysia, while MP has a mine and refinery in California.
Both Lynas and MP count Mrs Rinehart’s Hancock Prospecting as a major shareholder. Hancock has an 8.2 per cent stake in Lynas and a 8.5 per cent slice of MP.
She crossed the 5 per cent substantial shareholding threshold in the duo during April last year, just two months after it came to light Lynas and MP had mulled a merger.
Her Lynas holding had paper gains of about $79.1m on Thursday and MP added $55.2m to her wealth on Wednesday night.
Hancock also has a 5 per cent interest in early-stage developer Brazilian Rare Earths, a holding that declined by about $0.6m on Thursday.
But a large stake in fellow mining hopeful Arafura Rare Earths more than made up for decline, piling another $3.2m onto her net worth.
The rare earth windfall is still a drop in the ocean for Mrs Rinehart. Her net worth is estimated to be $38 billion.
