The agreement follows an initial MOU between the two parties from October 2022 and is for an initial three-year term that covers 60% of the rare earth mineral concentrate and zircon-titanium heavy mineral sand (HMS) produced from phase 1 of the Goschen project. Subject to government approval outcomes in 2024, the involvement of Shenghe is hoped to fast-track first production at Goschen for 2025.

The Australian Foreign Investment Review Board (FIRB) has remained a barrier for Chinese ownership in Australia exceeding 20% equity, with the FIRB blocking Yuxiao Funds approach to Northern Minerals in August 2022, although other purchases such as the 50% shareholding in Sheffield Resources Thunderbird HMS project in December 2020 were approved.

Despite the development of more than 100 rare earth projects in the early 2010s, the rise of non-Chinese rare earth production has been limited to a handful of projects. Rare earth mine production outside China and Myanmar reached over 60kt REE in 2020, compared to around 18-19kt REE in 2015, principally from Lynas Rare Earths in Australia and MP Materials in the USA.

Heavy mineral sand operations have contributed to the rise, with increased recovery of monazite mineral sand concentrates since 2017-2018 as rare earth prices increased, with one of the first and largest sources coming from Rio Tinto’s Fort Dauphin HMS mine in Madagascar. Monazite concentrates are being shipped to China and included Illuka’s pilot period for its Australian Eneabba HMS operation.

China has increasingly extended its influence over existing or potential suppliers of rare earths via direct investment in development projects, offtake agreements and the construction of new facilities by Chinese owned enterprises. Shenghe Resources (initiated by Sichuan Geological Group and supported by the Sichuan Mineral Resources Institute, is a major HMS and RE processor in China) has spearheaded China’s involvement in rare earth operations and projects outside of China.

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