RareX Limited (ASX: REE) has entered into a non-binding Memorandum of Understanding (MoU) with the leading global rare earths producer, Shenghe Resources Holdings Co.
The terms of the MoU provide a framework for Shenghe and RareX to establish an alliance via the formation of a jointly owned Rare Earths Trading Company (RET Co) to source rare earths concentrates globally (excluding from within China) for processing at Shenghe’s existing and proposed refining assets within China and around the world.
Listed on the Shanghai Stock Exchange, Shenghe has a market capitalisation of approximately US$4.6 billion. It is a leading producer of rare earths, zirconium and titanium, including being vertically integrated through the rare earths value chain from ore mining, processing to concentrate production, refining and separating to high-purity rare earths oxides, metals and alloys, and the production of a range of downstream rare earths products.
Shenghe’s two primary investments outside of China are an 8% interest in MP Materials Corp., which has a market capitalisation of approximately US$4.8 billion, and a 9.7% interest in Greenland Minerals, which has a market capitalisation of approximately A$380 million.
Key MoU terms are:
- Initial equity ownership structure of RET Co of 51% Shenghe and 49% RareX.
- Both Shenghe and RareX to support RET Co in its business activities.
- RET Co to source rare earths concentrates globally (excluding from within China) to supply Shenghe’s existing and proposed rare earth refining operations globally.
RareX Managing Director, Jeremy Robinson, said that the MoU may also see Shenghe and RareX commence commercial discussions towards the Chinese firm investing, on commercial terms, in RareX’s Cummins Range Rare Earths Project.
We are absolutely delighted to be moving towards securing an alliance with a company of the size and quality of Shenghe in the global rare earths industry,” Mr Robinson said.
“This is an exciting development for RareX and our shareholders which opens up a number of significant growth pathways.
“We look forward to progressing discussions with Shenghe over the coming months and to working collaboratively for the benefit of both companies.”
Mr Robinson saidRareX also remains focused on preparing for the upcoming drill programme at the 100%-owned Cummins Range Rare Earths Project in the Kimberley region of Western Australia.
Work is also progressing on an updated Mineral Resource Estimate, which is on track to be released later this quarter.