Molycorp to acquire Canadian rare earth firm Neo Material for $1.31 bn

US-based rare earth miner Molycorp, Inc. yesterday said that it is acquiring its Canadian peer Neo Material Technologies, for about C$1.3 billion ($1.31 billion), a move that may loosen China's vice-like grip on rare earth metals that are used for everything from halogen lights and mobile handsets to precision-guided missiles.

Under the friendly deal, Greenwood Village, Colorado-based Molycorp will pay shareholders of Neo Materials C$11.30 a share, comprising C$8.05 in cash and 0.122 of a Molycorp share.

The deal will combine two unique rare earth companies - one with a world-class, high-quality resource, and the other with world-class rare earth product design and processing capabilities.

Toronto-based Neo Material is a produces, processes and develop neodymium-iron-boron magnetic powders, rare earths and zirconium-based engineered materials and applications, and other rare metals and their compounds.

Neo Material's powders are used to produce bonded magnets, generally used in micro motors, precision motors, sensors and other applications requiring high levels of magnetic strength, flexibility, small size and reduced weight.

Rare earth and zirconium applications include catalytic converters, computers, television display panels, optical lenses, mobile phones and electronic chips. The company's rare metals products are primarily used in the wireless, LED, flat panel, turbine, solar and catalyst industries.