USA Rare Earths IPO 추진... US Companies' Move Toward 'Complete Domestic Production'
[Asia Economy Reporter Yujin Cho] The competition among U.S. companies to "domesticate" rare earth elements (REEs) is intensifying as the rare earth market becomes a new front in the U.S.-China trade conflict. This is in preparation for China's import restrictions, as China is the largest producer of rare earths, which are key raw materials used in advanced industries such as electric vehicle batteries, semiconductors, and military equipment.
On the 3rd (local time), the Wall Street Journal (WSJ) reported that USA Rare Earths, a U.S. rare earth company based in Texas, is considering an initial public offering (IPO) worth $1 billion (approximately 1.1 trillion KRW).
The company is pushing for a listing on the New York Stock Exchange with Goldman Sachs and others as lead underwriters. Finis Althaus, CEO of USA Rare Earths, stated, "We are discussing various funding options, including mergers with special purpose acquisition companies (SPACs) and IPOs." The funds raised through the listing will be used to secure mining and refining facilities for the complete domestication of rare earths.
This comes amid growing concerns over China's dominance of the rare earth market amid U.S.-China trade tensions. Following the Trump administration, the Biden administration is also intensifying its trade dispute with China. The Biden administration is reviewing executive orders aimed at reducing dependence on China for essential materials such as rare earths.
The plan is to achieve full domestic production and processing of rare earths, which are critical raw materials used in semiconductors, electric vehicle batteries, military equipment such as fighter jets and missiles, and renewable energy, to become independent from China, which threatens export restrictions. During the Trump administration, China's National Development and Reform Commission (NDRC) hinted that rare earth exports could be used as a sanction card against the U.S., issuing warnings.
China mines more than 70% of the world's rare earths and monopolizes 90% of refining technology. Major U.S. companies such as General Motors (GM) rely 100% on China for their rare earth demand.
Market expectations for USA Rare Earths' valuation are high. MP Materials, the only rare earth company in the U.S., entered the New York Stock Exchange last November through a merger with a SPAC, successfully raising $554 million. As the U.S.-China conflict over the rare earth market has escalated, MP Materials' stock price has more than doubled since its debut.
The WSJ reported, "Investor interest in rare earths is expected to increase further due to attempts to diversify supply to countries outside China and the growing demand from the renewable energy industry."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
