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Hochschild to spin out Chilean rare earths project

The date of: 2021-10-21
viewed: 0
source:The Banker
Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found at Hochschild Mining said it would spin out and list its Chilean rare earth deposit, saying the business needed new capital to become a supplier to the clean energy industry.
The London-listed precious metals miner said it would concentrate on its core business, while continuing to hold 20 per cent of the new Toronto-listed rare earth company Aclara.
Shares in rare earth mining companies have rallied this year as demand grows for rare-earth magnets, which are used in electric car motors and wind turbines.
Shares in Australia’s Lynas have risen 55 per cent since the start of January, while US rare earth miner MP Materials is up 17 per cent.
Shares in Hochschild rose 4 per cent on Tuesday to 149p.
“We view this as the best way to achieve fair value for the rare earths business that should trade at a premium to the company’s mature precious metals business,” analysts at Berenberg said. “This, however, creates an issue for Hochschild as Aclara was, by a margin, the most interesting development project in its portfolio.”
Hochschild acquired the deposit in Chile for $56m in cash in October 2019, saying it expected the rare earth market to grow “exponentially.”
The 600-hectare project contains rare earth elements based in clays, which the company says are easier to excavate and contain “negligible” amounts of radioactivity. The group said it aimed to supply heavy rare earths dysprosium and terbium as well as light rare earths neodymium and praseodymium, which are all used in magnets.
Aclara wants to become a sustainable source of rare earth supply outside of China, which dominates the market, according to its listing prospectus.
With production set to start in 2024 the company said it would account for about 2 per cent of global dysprosium production, or 28 per cent of supply outside of China and Myanmar.
However, the rare earth concentrates produced by the group will still need to be processed by third parties. The company said it would consider processing in China, or at plants in India or Estonia. Longer-term it would look at building its own separation plant, it added.
Hochschild said its chief financial officer, Ramon Barua, would step down to lead the new business.
“This is the logical next step forward for our rare earth business,” said Eduardo Hochschild, chair of the company. “It is our belief that, as two standalone businesses, both Hochschild and Aclara will have the greatest potential for delivering long-term value creation.”



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