USA Rare Earth Considers Building French Magnet Plant

USA Rare Earth considers magnet plant in France after Carester investment

USA Rare Earth's Strategic Expansion in Europe

By Eric Onstad

Investment in Carester and French Magnet Plant Plans

LONDON, April 9 (Reuters) - USA Rare Earth is considering building a permanent 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.

Integrated Rare Earths Operation

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.

The same size stake in Carester will be bought by InfraVia, a critical minerals fund seeded by the French state, it added.

Support from the French Government

"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.

They were in the initial planning stages regarding a magnet plant, said CFO Robert Steele, who declined to give a timeline or further details.

Existing Operations and Supply Agreements

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

Carester's French Plant and Rare Earth Supply

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 get 15-year supply and offtake agreements, allowing it to send material from its Round Top mine in Texas for processing and buy resulting processed heavy rare earth oxides.

Collaboration with Less Common Metals

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 Funding and Production Forecasts

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)

(Reporting by Eric Onstad; Editing by Alexander Smith)