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00:00Tell us a little bit about this deal and how it changes the game for you.
00:04And again, welcome back to Bloomberg Business with Kelly.
00:07Carol and Tim, it is wonderful to be back with you, and this time in this brand new role.
00:12Yes, USA Rare Earth is becoming the global leader in rare earths.
00:18And this transformative acquisition we've announced is with Cerro Verde Group.
00:22They are the owners and operators of the only mine outside of Asia that produces all four magnetic rare earths.
00:30And they have just announced an agreement as well through a special purpose vehicle backed by the U.S. government
00:37and some private investors for a 15-year 100% offtake with price floors on all four magnetic rare earths.
00:46So we talk about rare earths, and people who are regular audience members of this program, they know 17 elements
00:54essential to EVs, wind turbines, military hardware.
00:57China still dominates mining, processing, and magnet production.
01:02So does this deal that has these rare earths outside of China, does it change the fact that Western governments
01:09are scrambling to support new entrants?
01:11This makes us a brilliant partner for those governments who are trying to solve this issue.
01:17Yes, for decades now, in 1992, China declared the Mideast has oil, we have rare earth, and they set about
01:25building a monopoly.
01:26Now they've used that monopoly against us.
01:29And listen, we have what it takes in order to develop our own value chain outside of China,
01:35from mining to processing, which is, quite frankly, one of the trickiest links in the chain,
01:41to metal making and ultimately to magnet making.
01:45USA Rare Earth has been making moves at every link across that chain to make sure that there is a
01:51response.
01:52We can grow the business outside of China.
01:55But more importantly, over time, we can become the global leader.
01:59Will you go deeper, Barbara, because I feel like we're all learning about this.
02:03It wasn't something we were talking about a lot two years ago, but we are certainly over the past year.
02:08You mentioned the processing.
02:09That is one of the trickier links in the chain you mentioned.
02:13China still dominates when it comes to processing.
02:16Is it realistic to think that the U.S. can catch up ever to China when it comes to processing?
02:22And how tricky is it going to be to undo that link or make that link connected and make it
02:28work here in the U.S.?
02:30This is a matter of investment.
02:33And yes, indeed, we already have geologists, metallurgists, chemists who have successfully demonstrated separation technologies.
02:41You see, when ore or a clay comes out of the ground, it has those rare earth elements in it.
02:48Those have to be separated from the rest of the ore body.
02:52And the processes to do that sometimes involve solvents.
02:55Sometimes they involve ionic exchange.
02:57Very well understood chemical processes.
03:00And it's a matter of building the facilities that will make them.
03:02For the next two years, we are going to be on the search for who can move the fastest.
03:08And in fact, USA Rare Earth just invested in Carister, a firm in the south of France, very capable of
03:15heavy rare earth processing.
03:16They're bringing their processing online by the end of this year.
03:20We ourselves, in our proposal to the Department of Commerce, CHIP's program office, we've included processing as a key element
03:28of our own operations.
03:30And in order to first process our own ore body at Round Top in Sierra Blanca, Texas, but also to
03:38take third party mixed rare earth concentrate like that, which may come out of Cerro Verde.
03:43You mentioned Carister, so I want to get more into the acquisitions or investments.
03:48So the acquisitions that you've done in a short time, Less Common Metals last year, that 12.5% stake
03:52in Carister, now Cerro Verde.
03:54Are you going to stay in your lane of NDFEB, which I learned today, is neodymium iron boron permanent magnets,
04:03which is your core.
04:04That's your primary product.
04:05Are you going to stay in that lane or are these acquisitions representing you guys expanding a little bit?
04:10Today, we're focused on NDFEB, yes, indeed, a certain type of magnet.
04:15We're all learning.
04:17And you've heard that they're used in everything from semiconductors to our defense articles, frankly, even into the everyday electronics
04:25that we use.
04:26They are in everything in our economy.
04:28And our focus is going to be to assure that industrial players have access to the supplies they need in
04:35case of disruption.
04:36Think of, in these early days, supplying insurance quantities to make sure that, in case of disruption, people can drive
04:44through.
04:45But over time, we'll be able to pick up production.
04:48Now, there are also magnets that are made with samarium cobalt.
04:51That's another form that has many uses.
04:54And we've partnered with folks like Arnold Magnetics in order to make sure that we can, first of all, serve
05:01their needs with metal from our metal-making operations, but then also combine our NDFEB magnets with theirs for those
05:09customers who need access to both.
05:11Barbara, are you guys done with deals for a while?
05:14Are you anticipating that there's going to be more that you need to do to kind of build this up?
05:18I mean, this is a big deal in terms of what the United States needs to do.
05:24Lots of money, lots of actions, lots of activity.
05:26So is there more acquisitions from you guys to come?
05:30Yeah, Carol, you should think about this as a platform for growth.
05:33This is a platform for growth.
05:35This market space outside of China has been fragmented all this time.
05:39There's a lot of friction in the system.
05:41Great opportunities for companies who have complementary capabilities to come together.
05:46Now, with the acquisition of Sara Verde, we've also brought on Sir Mick Davis and Thras Moraitis.
05:53Both of them will be on our board.
05:55Thras will join me as president of USA Rare Earth.
05:58And you may know them as the power duo who put together Extrata, grew it from $500 million to $65
06:05billion.
06:07In this market space, they recognized years ago that the rare earth space was ripe for exactly the kind of
06:15business approach that they are so adept at handling.
06:18And I look forward to working with both of them on our overarching strategy.
06:22Hey, Barbara, we have a couple minutes left.
06:23There's a lot we want to get to, including some news today.
06:25But before we get there, USA Rare Earth received $1.6 billion in proposed funding from the U.S. Department
06:31of Commerce in January.
06:32It's conditional on certain things.
06:34Should investors expect more support from the U.S. government?
06:37What you'll see is that together with Sara Verde, we're supported and working with the Department of Commerce, the Department
06:43of War, Department of Energy.
06:45We have relationships all across.
06:48Sara Verde announced an acquisition, not an acquisition, an investment by DFC.
06:54So, you know, clearly there is great government interest in the work that we're doing.
06:59And we are happy to see investments that are accelerating our progress across the board.
07:04Look for us to be involved in additional engagements with the U.S. government and our allies where we can
07:12help scale or accelerate growth.
07:14So I would say that that's a yes, more money coming, or maybe?
07:21We are absolutely engaged with all of those who have funds applied to critical minerals.
07:25You mentioned the U.S. and our allies, and that's where I want to go.
07:28What do you think about the agreement, Barbara, that was signed today between the U.S. and EU to coordinate
07:33on critical minerals when it comes to price floors, offtake agreements, and more?
07:39Well, think about the power of this.
07:41China has been engaging in practices that, you know, artificially drove prices in their favor.
07:47Anytime they wanted to, they could drop prices, flood the market, and frankly, run businesses out of the marketplace.
07:53And so by agreeing to price floors, we're sending long-term signals that say there is a market.
07:59We want to grow it.
08:00It is worthy of investment.
08:02Have courage.
08:03Drive through this because what we have to do is, yes, enhance the price floors, make sure that we have
08:10a stable business perspective going forward.
08:13As we grow, as we scale, then market dynamics will absolutely take over our time.
08:19And I'm thrilled that the EU has stepped forward to join us in the effort.
08:23Well, to follow up on Carol's question there, how should the U.S. and European nations handle price floors?
08:29How should that work?
08:31We have been sending our input to the U.S. trade representative and others who are working on policies.
08:37You know, we feel that it's really important that if we can agree that we as collaborative countries are going
08:46to join together and agree not to buy those Chinese products that often have been artificially skewed price-wise.
08:55There's clearly government buying that will take place, and we're in support of the government mandates that are coming along
09:02for government contractors.
09:03But what's even more important these days is that the buyers of large-scale material, like ours, are looking for
09:12non-China sources and are recognizing the power of their buying habits.
09:18I call it industrial patriotism, recognizing that the actions they take will strengthen the market.
09:24Barbara, really quickly, 30 seconds, have you been looped in on any of the conversations between the Europeans and Americans?
09:29I mean, given that you guys now own assets in Europe and the U.S.?
09:34Yeah, USA Rare Earth colleagues are often invited into conversations, and we're more than happy to share our expertise, join
09:43in the conversation, and help people understand the economic situation we're in and think of potential solutions.
09:49We've got to use every tool in the tool belt right now.
09:53Real quickly, upbeat conversations, stressful conversations, because there's a reason.
09:57No, upbeat.
09:57Upbeat.
09:58Upbeat.
09:58I've been so encouraged by how helpful everyone wants to be.
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