Peak Rare Earths announced Shenghe Resources Holding have subscribed to a non-binding term sheet for 50% ownership in Ngualla Group UK, which holds a 84% stake in the Ngualla Rare Earth project, Tanzania. 

The partnership between Shenghe and Peak Rare Earths would see Shenghe invest A$96M (US$63.4M) to acquire a 50% shareholding of the JV with Peak Rare Earths, Ngualla Group UK, which itself owns an 84% stake in Mamba Minerals and Mamba Refinery developing the Ngualla rare earth project and associated mineral processing facilities.  The term sheet non-binding subscription would see Shenghe arrange a debt facility to fully fund the development of the Ngualla project in Tanzania, with no requirement for Peak Rare Earths to contribute development equity funding.  Shenghe will also participate in the tender of project EPCM, EPC or EPS execution packages, suggesting Shenghe will be closely tied to project construction and commissioning.      

As a Chinese state-owned developer, trader and processor of rare earths, Shenghe Resources has access to technical expertise within the China rare earth supply chain.  The JV between Shenghe and Peak Rare Earths will look to leverage this expertise in optimising the Ngualla flowsheet and developing value-add capacity within Tanzania. However, with the export of technical rare earth processing knowledge being prohibited in China, it is unclear how far in the rare earth supply chain Shenghe and associated Chinese operators will be able to assist with development in Tanzania.    

The development of the Ngualla project would see Shenghe able to benefit from the off-take agreements signed with Peak Rare Earths in August 2023 for 100% of rare earth concentrate output from the Ngualla project.  As MP Materials in the USA, Shenghe’s current major international supplier of rare earth feedstock, increasingly looks to integrate its supply chain domestically and with China-USA relations regarding critical materials continuing to cool, the development of Ngualla presents a new alternative feedstock source in jurisdiction more welcoming to Chinese investment.