Deal in the Rare Earth Metals Market: U.S. Mid-Cap Company Aims to Compete with China

Energy Fuels, a rare-earth metals processor with a market capitalization of just under $3.9 billion on the New York Stock Exchange, has agreed to acquire VAC, a manufacturer of magnets for the automotive and defense industries. The deal will create the West’s first fully integrated player in a market currently dominated by China.

Energy Fuels will acquire the VAC Group's legal entities from the U.S. investment firm Ara Partners.

Energy Fuels itself owns the White Mesa uranium deposit and the White Mesa Mill, the only facility in the United States capable of processing both uranium and rare earth elements. VAC, meanwhile, owns magnet production facilities in North America, Europe, and Asia. According to the press release, the combination of their assets will create the West’s first fully integrated player in the rare earth elements market.

Under the terms of the deal, VAC is valued at approximately $1.9 billion, of which Energy Fuels will pay $718 million in cash, with the remainder to be paid in its own shares, according to the statement. To do so, the company will issue approximately 65.9 million new shares at a price of $16.12 per share—the closing price on June 22, the day before the deal was announced.

The company will also assume VAC's debt of approximately $140 million, according to the press release. Energy Fuels has already reached an agreement with Goldman Sachs to provide a $250 million term loan to refinance part of the debt, the company said.

Energy Fuels is building a complete supply chain for rare earth metals. China currently dominates the market and imposed export restrictions on these elements in 2025.

Energy Fuels’ integrated platform is expected to receive feedstock from the Donald rare-earth metals deposit in Australia, which it is developing in partnership with the Australian company Astron Corporation. In the first phase, Energy Fuels will receive up to 8,000 metric tons of raw materials annually from the deposit, with the potential to expand to 14,000 metric tons. The company notes that this would be sufficient to produce 1.7 million electric vehicles.

The White Mesa plant in the United States will handle the processing. In June, the U.S. Department of Defense and the Office of Strategic Capital committed $725 million in funding to Energy Fuels to expand its capacity. To receive the funds, the company must undergo a standard review.

Metals and alloys will be produced at Australian Strategic Materials’ plant in Korea and at a facility the company plans to build in the United States. Energy Fuels announced the acquisition of the Australian company in January, but the deal has not yet closed.

The assembly of the magnets will be handled by VAC's European facilities and its recently commissioned U.S. plant.

All of this will put the combined company in a unique position to meet the rapidly growing demand from automakers, the aerospace and defense industries, chipmakers, hyperscale data centers, and the robotics sector, according to the press release.

Following the announcement of the deal with VAC, Energy Fuels’ stock price fell on June 23 amid a broad sell-off on U.S. stock exchanges and continued to decline the following day. On June 24, the mid-cap company’s shares fell 3%.

Wall Street, however, remains optimistic about Energy Fuels’ prospects: the company’s stock has seven “buy” recommendations from analysts and one “hold” rating. The average price target is $27, which is 74% higher than the stock’s price at the last close.