China Rare Earth Group in talks to buy MP Materials shareholder Shenghe Resources, sources say

Talks between the two companies have been underway since earlier this year, said the sources, who spoke on condition of anonymity given the sensitivity of the matter. China Rare Earth Group wants to take a controlling stake, one of the people said. The sources did not know when the acquisition would be announced or completed. An acquisition would give China Rare Earth control over one of the last leading Chinese companies in rare earth mining and refining with some private ownership, bringing to a close a decades-long push to consolidate the sector under state control. It would also give Beijing tighter control over elements that are vital to electric vehicles, wind turbines, electronics and the defense sector. It has wielded this control to great effect in its trade war with the US. Shenghe Resources said it was aware of "false" reports in overseas media regarding a certain rare earth enterprise group's alleged plan to acquire a controlling stake in the company and indirectly hold interests in the company's overseas assets. "Upon written inquiry by the company to its controlling shareholder, the Institute of Multipurpose Utilization of Mineral Resources, the Institute responded in writing explicitly stating that there are no plans to transfer the company's controlling stake to external parties," Shenghe Resources said in a filing to the Shanghai stock exchange late on Sunday. Last year, Shenghe acquired Australia's Peak Rare Earths. It is not clear how the prospect of a major Chinese state-owned rare earth firm sharing space on a shareholder registry with the US Department of Defense could impact the deal. The sources did not know what would happen to Shenghe's overseas assets and stakes. MP has repeatedly said neither Shenghe nor the Chinese government has any control over its operations. China Rare Earth Group and the Ministry of Commerce did not respond to requests for comment. A deal would also grant Shenghe better access to quotas that Beijing typically uses to control supply, according to one of the sources. Beijing grants those quotas to state-run companies and then the quotas are allocated to subsidiaries. The quotas for mining, smelting and separation are closely monitored as a barometer for global rare earths supply, but China has held back from publicly disclosing them. China Rare Earth Group, set up in 2021 after a reorganization of five state-run rare-earths-related companies, is the country's largest supplier of heavy rare earth elements. State-owned China Rare Earth Group is in talks to acquire Shenghe Resources 600392.SS, said two sources with knowledge of the matter, a move that would consolidate Beijing's control over the sector and give the firm a stake in one of Washington's rare earth plays. If successful, the deal would hand over control of Shenghe's stakes in foreign firms, including a 3% share of US rare earths company MP Materials MP.N, which counts the US Department of Defense as its largest shareholder after an investment last year.

China Rare Earth Group in talks to buy MP Materials shareholder Shenghe Resources, sources say

Talks underway since earlier this year

Shenghe denies plans to transfer control

Impact on overseas assets and quotas remains unclear

China Rare Earth Group in talks to buy Shenghe Resources

Related News

Neonc Technologies CFO Keithly Garnett sells 5,000 common shares worth $16,809 on 10b5-1 plan

Democrats try to ride data center backlash to election victory in rural US Midwest

VinFast Says SACE Announces USD 200 Million Financing Facility For Vinfast Vietnam

Fortunex Acquisition Corporation And WT Realty Group Inc. Announce Business Combination Agreement

Oracle's $18 billion data center debt under pressure, FT reports