US uranium group to buy Australian miner in race to secure rare earths
Energy Fuels agrees $300mn deal to acquire Australian Strategic Materials in bid to create non-Chinese supply chain
US uranium group Energy Fuels will acquire Australian Strategic Materials to create a “mines-to-metal” champion in the race to create a non-Chinese supply chain for rare earths.
Energy Fuels has agreed an all-share deal for ASM worth A$447mn ($300mn) that would mean the US-listed group takes a secondary listing on the Australian exchange. Shares of ASM more than doubled on Wednesday after the announcement.
The deal is the latest sign that US companies are looking to Australia for critical minerals development after China placed export controls on refined rare earths last year. The materials are needed to create permanent magnets and other components in industries ranging from defence and energy to cars.
Washington and Canberra in October agreed to invest $1bn each in rare earth and critical mineral projects to bolster the supply chain outside China. Mining billionaire Robert Friedland has backed the development of a scandium project in Parkes, west of Sydney, as part of a broader push to diversify supply.
ASM, chaired by Ian Gandel, a scion of the billionaire Gandel family that owns shopping centres and fashion brands in Australia, was a stock market darling during the Covid-19 pandemic on prospects for its rare earths project in Dubbo, near Parkes.
But its shares have lost almost 90 per cent of their value since late 2021 as investors questioned the project’s viability.
ASM then expanded to processing rare earths, opening a facility in South Korea in 2022 that now supplies metals to Neo Performance Materials, a Canadian maker of permanent magnets operating in Estonia. The company has plans to build a similar facility in the US.
The global effort to build a non-Chinese supply chain has turned ASM into a valuable commodity, said Reg Spencer, a mining analyst at bank Canaccord Genuity.
“There’s no shortage of rare earths projects and mines, but someone has to convert it into [usable] metal. That has been a major gap,” he said of the niche that ASM has carved out.
Energy Fuels said ASM’s South Korean plant was one of the only facilities outside China that produces rare-earth metals and alloys.
Combining it with Energy Fuels’ rare earth separating facility in Utah will create the world’s largest integrated “mining-to-metal and alloy” producer outside China, said the US company.
“ASM’s proven skills and intellectual property will also allow us to expand [rare-earth] metal and alloy capacity in the US,” said Mark Chalmers, chief executive of Energy Fuels.
“Furthermore, we would gain access to ASM’s significant Dubbo Project, providing additional long-term [rare earths] development and growth opportunities to our existing mineral resource portfolio.”