Chinese Rare Earth Giant Takes Stake in Canada’s Only Rare Earth Mine

by | 30. Oct 2023 - 12:01 | Finances

Shenghe Resources acquires shares of ailing Vital Metals.

Chinese mining company Shenghe Resources will acquire shares in Vital Metals. The Australian company owns Canada’s only rare earth mine, Nechalacho. A subsidiary of Shenghe will initially acquire 9.99 percent of new shares for the equivalent of $3.8 million, according to the announcement (PDF). An extension of up to 8.2 percent for about $5.7 million is possible, it said.

As part of the agreement, Shenghe will acquire a 50 percent interest in Vital’s Wigu Hill rare earth project in Tanzania, possibly increasing to 75 percent after feasibility studies are completed.

According to Vital, part of the initial investment will be used to pay off existing debts. In addition, the funding will help in the further development of Nechalacho.

The Australian company recently let its subsidiary responsible for building a Canadian rare earth processing plant go bankrupt (PDF), a step backward in building a North American supply chain for the critical commodity. As we reported, the work was halted back in April because selling the intermediates proved uneconomical. Vital said it wanted to focus more on mining instead.

However, Shenghe’s now-announced cash injection contradicts its goal of becoming a rare earth supplier independent of China. The Chinese group also has stakes in other companies and deposits that are committed to building new supply chains outside the People’s Republic. For example, Shenghe holds stakes in MP Materials, the operator of the only U.S. rare earth mine, Mountain Pass, and projects in Vietnam, Greenland, and Australia. In addition to Wigu Hill, the Chinese commodities giant has also secured access to another rare earth project in Tanzania, Ngualla, owned by Australian company Peak Rare Earths (we reported).

Photo: iStock/nattanan726

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