State-owned China Rare Earth Group is in talks to acquire Shenghe Resources, a move that would consolidate Beijing's control over the sector and give the firm a stake in US rare earths company MP Materials. The deal would hand over control of Shenghe's stakes in foreign firms, including its 3% share of MP Materials, which counts the US Department of Defense as its largest shareholder.
The potential acquisition of Shenghe Resources by China Rare Earth Group could significantly impact global rare earth supply chains and geopolitical dynamics, as it would consolidate Beijing's control over a sector vital for green energy and defense technologies.
State-owned China Rare Earth Group is in discussions to acquire Shenghe Resources, a significant player in the rare earth sector, according to two sources familiar with the matter. This potential deal would further consolidate Beijing's influence over the critical minerals industry and grant China Rare Earth Group a stake in MP Materials, a US-based rare earths company. MP Materials counts the US Department of Defense as its largest shareholder following an investment last year.
Talks between the two Chinese companies have been ongoing since earlier this year, with China Rare Earth Group aiming to secure a controlling stake. If successful, the acquisition would bring one of the last leading Chinese rare earth mining and refining companies with private ownership under state control, marking a continuation of Beijing's decades-long effort to consolidate the sector. This move would also tighten China's grip on elements crucial for electric vehicles, wind turbines, electronics, and defense.
Shenghe Resources also holds stakes in foreign firms, including its acquisition of Australia's Peak Rare Earths last year. The implications of a major Chinese state-owned entity sharing a shareholder registry with the US Department of Defense remain unclear, as do the future of Shenghe's overseas assets. MP Materials has previously stated that neither Shenghe nor the Chinese government controls its operations.
According to one source, the acquisition would also provide Shenghe with better access to mining, smelting, and separation quotas, which Beijing typically allocates to state-run companies and their subsidiaries to manage global rare earth supply.