USA Rare Earth (USAR) subsidiary lands supply deal with Arnold Magnetic
USA Rare Earth (USAR) said on Thursday that its newly acquired subsidiary Less Common Metals has reached a supply agreement with Solvay SA (BRU) and Arnold Magnetic Technologies Corporation.
Less Common Metals (LCM) will supply Arnold with high-quality rare-earth materials for its production of advanced permanent magnets. Arnold is a subsidiary of Compass Diversified (CODI).
USA Rare Earth said in a press release that the agreement is "another step forward in strengthening the U.S. and European rare earth supply chains and ensuring long-term stability for key sectors including aerospace, defense, automotive, and energy."
Terms of the deal were not disclosed.
"This collaboration exemplifies the type of industrial partnerships that are rebuilding strength and resilience across the rare-earth ecosystem outside of China," USA Rare Earth CEO Barbara Humpton said in a statement.
"LCM's role demonstrates the strategic importance of secure, reliable sourcing, and how collaboration between trusted partners can guarantee sustainable access to critical rare-earth materials for global magnet manufacturers."
USA Rare Earth's stock surged 24.7% on Thursday. It is up 52.3% for the year.
“As market demand accelerates for sustainable, Western-sourced magnet materials, Arnold is taking decisive action to guarantee supply and provide commercial flexibility for our customers,” Aaron Williams, chief commercial officer of Arnold, said in a statement. “This partnership further reinforces our ability to serve global markets with next-generation magnetic solutions.”
USA Rare Earth just completed its acquisition of LCM last month for $100 million. LCM is a leading earth metal and alloy manufacturer based in the United Kingdom.
The company cited LCM's "strong network of long-term customers" across defense, automotive and magnet manufacturing in Europe and the United States as being a key highlight of the transaction. LCM also "maintains established government relationships" in Europe, the US and Japan.
White House to ramp up stakes in rare earth companies
Meanwhile, Bloomberg reported on Thursday that the Trump administration is planning to take more stakes in mineral companies as it seeks to cut into China's dominance in rare earth manufacturing.
Bloomberg quoted Jarrod Agen, executive director of the National Energy Dominance Council, who was speaking at a forum in Washington, D.C. Agen indicated that these government deals are becoming increasingly necessary as it squares off against Beijing.
“I think they’re the norm from our perspective,” Agen said. “There is a broad scope of different companies who are coming to us. They’re making the right case.”
Rare earths are the key building block of modern tech, powering everything from electric vehicles and semiconductors to robotics and missile guidance systems.
The Trump administration began its dealmaking back in July when MP Materials (MP) entered into a 10-year public-private relationship with the Department of Defense (DoD) to accelerate rare earth mining in the U.S.
As part of the agreement, the DoD has agreed to purchase $400 million of a newly-created series of the MP Material’s preferred stock, which is convertible into shares of the company’s common stock.
This investment makes the DoD the largest shareholder of MP materials.
The administration has also taken a $670 million stake in magnet producer Vulcan Elements Inc. and a $35.6 million stake in Canadian minerals explorer Trilogy Metals Inc.