USA Rare Earth considers building French magnet plant

USA Rare Earth considers building French magnet plant

USA Rare Earth's Strategic Investment in France

By Eric Onstad

LONDON, April 9 (Reuters) - USA Rare Earth is considering building a magnet plant in France, its CEO said on Thursday, after agreeing to pay 40 million euros ($47 million) for a stake in French rare earth processing firm Carester.

Global Push for Rare Earth Independence

The United States and Europe are rushing to establish domestic supplies of rare earths, which are vital for the green energy transition, electronics and the defence sector, and cut their dependence on top producer China.

Details of the Carester Stake Acquisition

As part of its drive to establish an integrated rare earths operation comprising mining, processing and magnet making, USA Rare Earth will buy a 12.5% stake in Carester, which is building a processing plant in southern France, the company said.

InfraVia, a critical minerals fund seeded by the French state, will also buy a 12.5% stake in privately held Carester, USA Rare Earth added.

French Government Support

"They (the French government) are interested in... supporting a potential USA Rare Earth magnet-making facility in the south of France," CEO Barbara Humpton told an investor call.

France's Role in the Rare Earth Sector

France, which is aiming to become a European hub for the rare earths sector, is also home to a rare earths plant owned by chemicals group Solvay. Former Solvay employees formed Carester in 2019.

Planning and Development of the Magnet Plant

Carester and USA Rare Earth are in the initial planning stages regarding a magnet plant, said USA Rare Earth CFO, Robert Steele, who declined to give a timeline or further details.

Existing USA Rare Earth Operations

USA Rare Earth, which agreed to a $1.6 billion debt-and-equity funding package with the U.S. government in January, has a magnet manufacturing plant in Stillwater, Oklahoma, which is expected to launch later this year.

Strategic Importance of the Carester Investment

In an interview with Reuters, Humpton said the Carester investment was partly to access French expertise in rare earths processing.

Building a Rare Earth Ecosystem

"When you're in a situation where there's limited know-how, the most important thing you can do is build the ecosystem and share that know-how," said Humpton, who became CEO last October and previously held roles at Siemens.

Production and Supply Agreements

Carester's French plant will produce heavy rare earths, which are necessary for magnets but may be difficult to source amid expected shortages, according to analysts.

Long-term Supply Arrangements

As part of the deal, USA Rare Earth will receive 15-year supply and offtake agreements, allowing it to send material from its Round Top mine in Texas for processing and buy processed heavy rare earth oxides.

Collaborations and Funding

Less Common Metals Partnership

USA Rare Earth's unit Less Common Metals, a British-based company that produces rare earth alloys and metals, sealed a deal with Carester in May last year to build a plant in France. 

Carester's Financial Backing

Carester has received 216 million euros from Japanese sources and the French state for its Caremag processing unit, which is forecast to produce 1,400 metric tons of rare earth oxides a year from recycled magnets and mining concentrates.

Currency Exchange Rate

($1 = 0.8558 euros)

Reporting Credits

(Reporting by Eric Onstad; Additional reporting by Ernest Scheyder in Houston; Editing by Alexander Smith and Lisa Shumaker)