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Vital Metals agrees cash injection from China rare earths giant

A load enters the Nechalacho ice road in March 2021
A load enters the Nechalacho ice road in March 2021. Bill Braden/Cheetah Resources

The NWT’s Nechalacho mine owner says it has agreed to sell shares worth up to $13 million to a Singapore subsidiary of Chinese rare earths company Shenghe Resource Holdings.

Vital Metals called the deal a “cornerstone investment that will allow the company to establish a new leadership team and to progress development of the large-scale Tardiff deposit” of rare earths at Nechalacho.

As part of the agreement, Shenghe is set to acquire an initial 50-percent interest in Vital’s Wigu Hill rare earths project in Tanzania.

Shenghe first announced the deal earlier this week. Vital confirmed it on Thursday.

The deal has two stages, the first of which is expected to unlock just over $5 million for Vital in the coming weeks. The second stage, if it goes ahead, would be worth around $8 million.



Vital says some of the initial $5 million will be used to clear existing debts, while $1.3 million of that sum will be spent to “progress development” at Nechalacho and a further $1.2 million will be used as general working capital.

In its Thursday press release, Vital said it would now work “to explore the development of an integrated North American supply chain for future rare earth production at Nechalacho.”

However, the company recently placed into bankruptcy a subsidiary it had formed to try to build a processing plant in Saskatoon, setting back efforts to build one pillar of such a supply chain.

Meanwhile, Chinese investment complicates the picture of Vital as a company trying to establish a North American supply chain to rival the Chinese industry.



Canada and the United States have each spent years championing the development of homegrown “critical minerals” supply chains to avoid too much reliance on China.

Previously, Vital has positioned itself as a firm using Nechalacho to offer an alternative to buying rare earths from China. While Thursday’s press release suggests that is still the case, it’ll be doing that with Chinese support and a Chinese company sharing in any successes.

For Shenghe, the Vital deal is the latest in a string of international partnerships. The company’s strategic plan has been reported to involve “consolidating the results of overseas cooperation projects” to guarantee a stable supply of rare earths for Shenghe’s own operations in China.

The Shanghai-listed company already has interests in a US rare earths mine and other Australian-backed ventures. (Vital, despite its NWT mine, is an Australia-based firm.)

“Shenghe recognises the potential of the Tardiff deposit to be a world-class large-scale and long life rare earths project, and is excited by the work completed to date by Vital Metals to progress the asset,” Shenghe chief executive Wang Xiaohui was quoted as saying in Thursday’s press release.