USA Rare Earth considers building magnet plant in France

USA Rare Earth USAR.O 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.

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.

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.

"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, 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 SOLB.BR. Former Solvay employees formed Carester in 2019.

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.

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.

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

"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 SIEGn.DE.

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.

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.

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 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.

($1 = 0.8558 euros)

-Eric Onstad/Reuters