China Rare Earth Group, a major state-owned Chinese rare earths company, is advancing talks to acquire Shenghe Resources, people familiar with the matter said. If the transaction is completed, a 3% stake in MP Materials is expected to be transferred from among the overseas companies held by Shenghe.
China Rare Earth Group, a major state-owned Chinese rare earths company, is advancing talks to acquire Shenghe Resources. 2 people familiar with the matter disclosed the development, saying the negotiations began this year. The specific timing and terms of the acquisition remain unknown. The timing of any future disclosure and whether a formal announcement will be made have not been determined.
If the acquisition is completed, the reorganization and integration of Shenghe Resources' overseas assets could accelerate. In particular, a 3% stake in U.S. rare earths company MP Materials is expected to be transferred to China Rare Earth Group. Following an investment last year, the U.S. Department of Defense is currently MP Materials' largest shareholder.
Some view completion of the transaction as part of the Chinese government's efforts to strengthen its control over the rare earths sector. Meanwhile, people familiar with the matter reportedly did not know what would happen to Shenghe's overseas assets and interests. China Rare Earth Group, Shenghe Resources and China's Ministry of Commerce have not issued official comments on the matter.
Shenghe acquired Australia's Peak Rare Earths last year, and if the latest development comes to fruition, the integration of overseas assets by state-owned companies could advance further. Details such as the specific completion date and how the shares will be allocated will depend on future disclosures.