Shenghe Resources (SSE:600392) said it would sell majority stakes in its smelting and separation businesses for ¥1.66 billion ($356.08 billion) and ¥1.81 billion ($388.27 million) to a subsidiary of state-owned China Rare Earth Group.
Shenghe Resources will transfer a 51% stake in its Leshan Shenghe subsidiary, after spinning off the subsidiary’s non-rare earth smelting and separation business, to a wholly owned subsidiary of China Rare Earth Group, according to a company filing on Sunday.
Reuters exclusively reported on September 18 that China Rare Earth Group was in talks to acquire Shenghe Resources, a move that would consolidate Beijing’s control over the sector.
Shenghe said on September 20 that its controlling shareholder had no plans for a stake transfer to external parties.
Shenghe will transfer 51% stakes in its other three subsidiaries handling rare earth smelting and separation — Quannan New Resources Rare Earth, Jiangyin Jiahua New Materials Resources, and Zibo Jiahua New Materials Resources — to the same subsidiary of China Rare Earth Group.
Shenghe holds stakes in several overseas rare earth miners, most notably US Government-backed MP Materials (NYSE:MP). The filings made no mention of MP Materials and said the deal was limited to Shenghe’s rare earth smelting and separation businesses.
Following completion of the stake transfers, Shenghe and the buyer will leverage their resource and industry strengths to secure production quotas and raw material supplies for the four companies while seeking to expand the companies’ production, the filing showed.
Shenghe’s shares were down 6.3% as of 0650 GMT.
(Reporting by Reuters Newsroom; Editing by Jacqueline Wong)
Main image: China Rare Earth Group
