Chinese Enterprises Secure Another Victory in Africa, Europe and the U.S. Lament Rare Earths' Difficulty Competing with China! Key Minerals of the African Continent: Shenghe Resources Strengthens Its Rare Earth Business in Ngualla, Tanzania: Global Supply Chain Strategic Transformation

¬ Shenghe Group has fully controlled Ngualla, acquiring Peak Rare Earths for 195 million Australian dollars, ensuring 100% future production

¬ With the growing global demand for electric vehicles and wind power generation, China has strengthened its control over the supply of neodymium-praseodymium oxide (NdPr)

China's mining enterprise Shenghe Resources will acquire 80.3% of the shares of Peak Rare Earths Ltd., paying 195 million Australian dollars (equivalent to 128 million US dollars), to gain full control over the Ngualla project in Tanzania. The transaction was approved by the court on September 19th and is expected to be completed before September 30th. Peak Company will delist from the Australian Securities Exchange on October 1st.

It is expected that the Ngualla nickel mine will produce approximately 37,200 tons of concentrate annually over the next 20 years, yielding about 1,800 tons of neodymium-praseodymium oxide. These materials are the core components of permanent magnets in electric vehicle motors. Given that China already accounts for 90% of the global refining capacity of NdPr, the output of this project is almost certain to be processed through Chinese-controlled separation plants, with export channels possibly passing through Dar es Salaam port.

The price impact remains controversial. Recent forecasts suggest that the price of NdPr ore may stabilize between $57-58 per kilogram by the end of this decade, but most banks and consulting firms still predict a price of $70-80 per kilogram, as the demand for electric vehicles and wind energy accelerates, and Chinese export quotas tighten. It is certain that Shenghe Resources now actually controls one of the few mineral deposits outside China that have received full permits and secured financing.

The Tanzanian government retains a 16% free carry interest and will collect a 3% revenue royalty. The 2022 impact assessment report by Peak Company predicted that the project would create 220 direct jobs and about 1,000 indirect jobs, but Shenghe Resources has not yet announced specific employment plans. According to local mining regulations, at least 60% of non-management positions must be filled by local employees, although the specific participation ratio of foreign personnel in technical positions will need to be determined after the formal contract is signed.

This transaction highlights the ability of Chinese capital to operate faster than its competitors. In early September, an American-backed acquisition worth 240 million Australian dollars was rejected at the last moment due to financing conditions. Shenghe Group's all-cash takeover offer was smaller in scale but has received full funding and prior approval from both Tanzanian and Australian regulatory authorities.

This transaction highlights the widespread concerns abroad regarding China's increasing influence in Africa's resource sector. Although there is no authoritative database confirming it, it is widely circulated that Chinese enterprises account for about 60% of new mining investments in Africa since 2023. It is certain that Western competitors, constrained by longer approval processes and stricter ESG standards, find it difficult to match, while Beijing-based companies continue to maintain a leading advantage.

By absorbing Ngualla, Shenghe Resources has strengthened its control over the rare earth supply chain and marginalized a mineral deposit that was once seen as a potential pillar for the diversification of the Western rare earth industry. For Tanzania, the benefits depend on implementation - royalties are guaranteed, but whether the local area can gain value remains uncertain. For the global market, the message is clear: in the African mining boom, the speed of capital often matters more than the size of the acquisition.

Source: ecofinagency

Original: www.toutiao.com/article/1843793659465740/

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