China Rare Earth Group in talks to acquire Shenghe Resources, putting MP Materials stake in focus

China Rare Earth Group is in talks to acquire a controlling stake in Shenghe Resources, a move that could bring the Chinese rare earth producer under tighter state control while giving Beijing influence over Shenghe’s overseas holdings, including a stake in US rare earths company MP Materials.

Two sources familiar with the matter told Reuters that discussions between the companies have been underway since earlier this year. One source said China Rare Earth Group is seeking a controlling stake, although neither source knew when the acquisition could be announced or completed.

If the deal goes through, China Rare Earth Group would take control of Shenghe’s interests in foreign companies, including its 3 per cent stake in MP Materials. The US rare earths company counts the US Department of Defense as its largest shareholder following an investment last year.

The potential overlap between a major Chinese state-owned rare earth company and the US Department of Defense on MP Materials’ shareholder registry could raise questions over the future of Shenghe’s overseas assets and stakes. The sources said they did not know how those holdings would be handled.

MP Materials has repeatedly said that neither Shenghe nor the Chinese government controls its operations.

To learn about the market potential of aluminium dross, explore “ALuminium Dross Processing: Generation, Recovery & Strategic Roadmap”

Deal could mark another step in China’s rare earth consolidation

An acquisition would bring one of the last leading Chinese rare earth mining and refining companies with some private ownership under the control of China Rare Earth Group. It would also mark the culmination of a decades-long effort to consolidate the country's rare earth sector under state control.

The move could further tighten Beijing’s control over rare earth elements used in electric vehicles, wind turbines, electronics and the defence sector. China has used its position over these materials as a key lever in its trade war with the US.

Shenghe expanded its international presence last year by acquiring Australia’s Peak Rare Earths. However, it remains unclear what would happen to its overseas assets and stakes if China Rare Earth Group completes the proposed acquisition.

To explore trade opportunities of aluminium consumables, visit AL Biz

Shenghe could gain greater access to rare earth quotas

Beyond ownership, the deal could also strengthen Shenghe’s access to China’s rare earth production quotas.

One source said the company could gain better access to quotas that Beijing typically uses to control supply. These quotas are granted to state-run companies and subsequently allocated among their subsidiaries.

Mining, smelting and separation quotas are closely watched as an indicator of global rare earth supply, although China has not publicly disclosed the figures.

China Rare Earth Group was established in 2021 after the reorganisation of five state-run companies involved in the rare earth sector. It is now the country’s largest supplier of heavy rare earth elements.

Unlock key insights from leading companies and experts across the aluminium ecosystem with our e-Magazine - Mine to Market: Aluminium Producers & Manufacturers 2026