In the rare earths Game of Thrones, Gina Rinehart grabs the crown

An important piece of Gina Rinehart’s strategic jigsaw puzzle was publicly placed this week when the iron ore billionaire grabbed a 5.8 per cent stake in Lynas Rare Earths. She seems to have done well, cannily predicting or coat-tailing government bets on supporting critical minerals.

In announcing new additional critical minerals projects on Wednesday, the federal government declared that “the road to net zero runs through Australia’s resources sector”, and Rinehart will be hoping for a decent spoonful from the profit pot at the end of that road.

Gina Rinehart is in a prime playmaker role.

Rinehart’s Lynas share play brings to two the number of rare earth companies in which she has taken a key equity position this month alone. Earlier in the month, Rinehart took a similar-sized stake in rare earth miner MP Materials.

Through her privately owned Hancock Prospecting, Rinehart has outlaid $49 million on the Lynas holding – chump change for someone sitting on a fortune of roughly $37 billion at last count, but it has given her a crucial gatekeeper say in how the industry will develop.

Lynas and MP Materials held merger discussions earlier this year, but a deal failed to materialise. However, Rinehart’s share raid on Lynas this week will ignite speculation that a deal between two of the largest rare earths groups outside China might be back on the agenda.

That puts her in a prime playmaker role.

Rare earths are not investments for the faint-hearted. Like many critical minerals, including nickel and lithium, prices have not been owner-friendly.

Both Lynas and MP are developing rare earth processing facilities in Texas, with those plants being designed to displace Chinese finished products from the rare earth supply chain.

Lynas’ US government funding more than doubled last year as the Biden administration accelerated its mission to secure supplies of rare earths.

Hancock’s other public rare earths holdings include a 5.85 per cent stake in Brazilian Rare Earths, an ASX-listed company with a market capitalisation of about $61 million. Rinehart also owns 10 per cent of the Northern Territory’s Arafura Rare Earths, which is capitalised at $432 million.

Rinehart can take a punt on what are commonly referred to as future facing minerals – thanks to the billions of dollars Hancock Prospecting generates each year from its extensive ownership of the iron ore mines. Those have been crucial to Australia’s historic prosperity and face the challenges of decarbonisation.

Rare earths are not investments for the faint-hearted. Like many critical minerals, including nickel and lithium (which are key to the world’s decarbonisation transition), prices have not been owner-friendly.

Several projects and companies have struggled to survive or find support.

Investors need to have the financial resources to take a punt and remain committed during wild price fluctuations.

But for many critical minerals and rare earths in particular, the future is also tied to geopolitical forces. Countries including Australia and the United States want to break the dominance of and reliance on China for supply and processing.

Lynas’ Mount Weld rare earth mine in Western Australia.Credit: Trevor Collens

And Rinehart has sniffed this wind.

Last month, the Albanese government announced moves to supercharge its push to break China’s stranglehold on global critical minerals supply with an $840 million package of loans and grants to help Rinehart-backed Arafura Rare Earths develop its Northern Territory mine and refinery.

The support is Labor’s biggest single financial commitment for the critical minerals sector and effectively expands taxpayers’ exposure to rare earths mining and processing by more than 50 per cent to well over $2 billion.

Meanwhile, last month Liontown Resources, whose largest shareholder is also Rinehart, secured a $550 million loan from big Australian commercial banks and taxpayer-funded agencies three months after an Australian banking consortium had withdrawn a $760 million loan aimed at enabling lithium to deliver first production this year.

On Wednesday, the government announced it would inject $585 million of taxpayer funds into projects producing key inputs for batteries, renewables and electric cars.

The Queensland-based Alpha HPA, which specialises in the production of ultra-high purity alumina used in LED lighting, semiconductors and lithium-ion batteries, will receive $400 million in new loans to establish a processing facility in Gladstone.

Spruiking the critical minerals support, Prime Minister Anthony Albanese said: “The global race for new jobs and new opportunities is on. Our government wants Australia to be in it to win it.”

So does Rinehart.

Read more:

• Red-dirt billionaires in race for ‘white gold’
• ‘I’m just a guy who got lucky’: Rise of the lithium kings
• The iron men with a $3 billion plan to save the planet

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.