Neo Performance Materials Inc. announced today that it has initiated transactions to divest a majority equity interest in Jiangyin Jiahua Advanced Material Resources Co., Ltd. (JAMR) to Shenghe Resources Holding Co., Ltd for approximately $25.6 million in cash. Additionally, Neo will sell 100% of the equity in Zibo Jiahua Advanced Material Resources Co., Ltd. (ZAMR) to Shenghe for around $4.1 million in cash. These transactions aim to facilitate the transition of Neo’s rare earth separation businesses in China to an integrated rare earth industry leader.
Following the completion of the transactions, Neo will retain a 9% equity interest in JAMR and secure exclusive distribution rights for JAMR’s heavy rare earth products to international customers for an initial term of 5 years. This move is expected to ensure a steady supply of premium products such as dysprosium and medical-grade gadolinium to Neo’s customers outside of China.
The decision to divest JAMR and ZAMR aligns with Neo’s strategic transformation initiatives, focusing on optimizing capital allocation and reducing earnings volatility. These transactions are anticipated to close in the fourth quarter of 2024, pending regulatory approvals in China and standard closing conditions.
Shenghe Resources Holding Co., Ltd, a prominent rare earth company with over two decades of experience, is set to leverage its global sourcing platform to enhance JAMR’s access to raw materials. Furthermore, Shenghe will integrate ZAMR’s remaining assets and employees into its operations, paving the way for continued growth and success for these assets.
By discontinuing ZAMR’s rare earth separation operations and shifting focus to downstream rare earth specialty oxides, Neo underscores its commitment to simplifying operations and emphasizing high-margin, downstream segments. The company will continue its midstream rare earth separation operations in Europe, reaffirming its dedication to operational excellence and value creation for shareholders.
