Meteoric holds the Caldeira rare earth project in southwestern Minas Gerais, Brazil. Lynas Rare Earths, with a market capitalization of approximately $9 billion and the largest rare earth separation producer outside of China, has agreed to acquire Meteoric Resources.

The all-stock transaction values the ASX-listed exploration company at approximately $672 million, giving Lynas access to Brazil's booming rare earth industry after the deal closes. Countries around the world are currently racing to rebuild rare earth production capacity outside of China.

Rare earths are critical minerals widely used in electric vehicles and consumer electronics, and are also important raw materials for fighter jets and missile systems. Currently, China dominates the rare earth processing segment. Against this backdrop, Western companies are pouring capital into Brazil.

Brazil has the world's second-largest rare earth reserves after China. The United States Geological Survey estimates Brazil's rare earth reserves at approximately 11 million tonnes, accounting for about 15% of global total reserves.

Meteoric holds the Caldeira rare earth project located in southwestern Minas Gerais, Brazil. In a joint announcement, Lynas and Meteoric stated that under the Australasian JORC mineral reporting code, the project is the largest proven ionic adsorption clay rare earth mineral resource outside of China.

Most rare earth projects in Brazil develop clay-type rare earth deposits. Compared to hard rock deposits commonly found in Australia and elsewhere, clay deposits typically have lower processing costs and simpler technical requirements. Currently, Lynas operates a hard rock rare earth mine in Australia, with rare earth processing operations located in both Australia and Malaysia.

Lynas board chairman John Humphrey said: "Expanding into a new country will help Lynas solidify its leading position in the global rare earth supply chain and meet customers' growing demand for rare earth raw materials." He noted that Brazil has a mature and well-established regulatory environment supportive of mining development.

The two companies stated that this acquisition also reflects the significance of Brazil's rare earth industry to both domestic and global rare earth supply chains. Brazil's industrial ambitions go beyond ore extraction. Brazilian government officials want companies to establish rare earth separation and smelting operations, rare earth metal production, and ultimately permanent magnet manufacturing.

The joint statement mentioned that Lynas will assess the feasibility of establishing more downstream processing operations in Brazil, in line with Brazil's economic and sustainable development goals. Lynas, with a market capitalization of approximately $9 billion, is the largest rare earth separation and smelting enterprise outside of China, and is also the only overseas manufacturer to achieve commercial production of heavy rare earths such as dysprosium and terbium; heavy rare earths added to permanent magnets enable them to maintain high efficiency in high-temperature environments.

The company is backed by Australia's richest person, Gina Rinehart. Facing rising market demand for rare earth raw materials from non-Chinese sources, Lynas has been expanding its business footprint. In March of this year, Lynas announced a supply agreement with the U.S. Department of Defense valued at an initial $96 million. At the time, Lynas said this partnership would help "achieve U.S. national security objectives and enhance supply chain resilience."

Lynas has been producing light rare earths such as neodymium and praseodymium in Malaysia for more than 13 years. Last year, the company achieved the first commercial production of dysprosium and terbium outside of China in decades. Earlier this year, Lynas began producing samarium oxide, a rare earth heavily used in the military sector, which was previously almost entirely processed by China. The acquisition of Meteoric will expand Lynas's mineral resource reserves and diversify its resource sources.

Meteoric executive chairman Andrew Tunks said the Caldeira ore body possesses advantages including high grade, good recovery rates, low capital investment, low operating costs, and scalability for large-scale expansion. The two companies released an announcement on Thursday disclosing the terms of the all-stock transaction: Meteoric shareholders will receive 0.0207 Lynas shares for each share they hold. The transaction represents a 68% premium to Meteoric's previous trading day closing price.

In mid-day trading on the Sydney market, Lynas shares fell 6.6%, while Meteoric shares rose more than 47%. Lynas stated that the all-stock transaction structure ensures the company has sufficient funds to develop the Caldeira project and other growth projects; the Caldeira project development investment is expected to exceed $500 million. The Meteoric board unanimously recommends that shareholders vote to approve the acquisition.

The announcement stated that company directors collectively hold 2.6% of shares and all plan to vote in favor; the company's largest shareholder, Tolga Kumova, holds approximately 6.7% and also supports the transaction. After the transaction closes, former Meteoric shareholders will collectively hold approximately 5.9% of Lynas shares.