Highlights
- Neo Performance Materials sold 86% of JAMR for $24.6 million to Shenghe Resources.
- Neo Performance Materials sold 88% of ZAMR for $3.4 million to Shenghe Resources.
- The JAMR transaction represented a 10.6x multiple on the facility's average EBITDA over five years.
- This strategic sale reduces Neo's footprint in China.
- The sale strengthens ties with a key player in the global rare earth supply chain.
Neo Performance Materials has finalized the sale of a majority equity interest (opens in a new tab) in its Chinese rare earth separation businesses to an affiliate of Shenghe Resources Holding Co. (opens in a new tab) The deal includes the sale of 86% of Jiangyin Jiahua Advanced Material Resources Co (opens in a new tab). (JAMR) for $24.6 million and 88% of Zibo Jiahua Advanced Material Resources Co. (opens in a new tab) (ZAMR) for $3.4 million in cash.
The JAMR transaction was notably lucrative, reflecting a 10.6x multiple on the facility’s average EBITDA over the past five years.
The ZAMR sale, revised from an original 98% equity transfer, was valued using an asset-based approach due to the facility’s closure in mid-2024. This strategic divestiture streamlines Neo’s global operations and reduces its footprint in China while unlocking value from legacy assets. It also strengthens ties with Shenghe, a key player in the global rare earth supply chain, amid rising global demand for critical materials used in green technologies.
China is tightening its ‘control’ over the RE sector within its borders. Was this an asset determined sale or a let’s get out before the inevitable state removal happens to such NEO assets? Autos etc., are also directing their new facility build to N. America. Are we seeing two huge consumer markets developing with access limited by value chain location, ESG compliance and tariff impacts, etc? NEO may well be simply reading the RE sector tea leaves which have been becoming a little clearer this decade. GLTA – REI
Good questions, lets see what unfolds.