Reuters Exclusive: China Rare Earth Group Plans to Acquire Controlling Stake in Shenghe Resources
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China's largest heavy-rare-earth state enterprise is negotiating a controlling stake in Shenghe Resources, Reuters reports; if completed, Chinese state capital and the U.S. Department of Defense would sit on the same company's shareholder register — a geopolitically charged outcome.
What exactly is on the table?
China Rare Earth Group is in talks with Shenghe Resources (SHA: 600392) to acquire a controlling stake.
Negotiations have been under way since earlier this year, but no timeline for announcement or completion has been set.
This means → the deal is still early-stage and uncertain, but the direction is clear — state capital wants to fold this privately held rare-earth asset into its portfolio.
Why does the U.S. Defense Department come into the picture?
Shenghe Resources holds roughly 3% of U.S. rare-earth company MP Materials.
MP Materials' largest shareholder is the U.S. Department of Defense, which completed its investment last year.
In plain terms = if the acquisition closes, Chinese state capital would appear — indirectly, via Shenghe — on MP Materials' shareholder register, sitting alongside the Pentagon.
Sources say it remains unclear how Shenghe's overseas assets and equity stakes would be handled; MP Materials has stated multiple times that neither Shenghe nor the Chinese government has any control over its operations.
What does this deal mean for China's rare-earth industry?
China Rare Earth Group was formed in 2021 by merging five state-owned rare-earth firms and is now China's largest supplier of heavy rare earths — the subset most critical to defense and advanced manufacturing.
Shenghe Resources is one of the few remaining Chinese rare-earth miners with partial private ownership.
This means → bringing Shenghe under state control would mark the near-completion of a decades-long consolidation of China's rare-earth sector into state hands.
What would Shenghe gain?
According to a source, a successful deal would give Shenghe easier access to mining, smelting, and separation quotas for rare earths.
In plain terms = Beijing typically allocates these quotas to state enterprises and their subsidiaries first; becoming a state subsidiary would put Shenghe closer to the front of the line.
This reflects a broader reality: rare-earth quotas are a key barometer for global supply, yet China has never publicly disclosed the specific figures.
What remains unresolved?
Shenghe completed its acquisition of Australia's Peak Rare Earths last year, expanding its overseas footprint.
China Rare Earth Group, Shenghe Resources, and China's Ministry of Commerce all declined to comment to Reuters.
This means → the deal's outcome, how overseas assets will be treated, and the potential fallout of Chinese state capital and the U.S. Defense Department sharing a shareholder register are all open questions the market will be watching.
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