Chinese company vows REE transparency

Rare Metal Blog

A Chinese company has signed on to a “Open Source” rare earths policy as a condition of getting approval to take a controlling stake in an Australian niobium‐REE explorer. While the projects are in Africa, this deal with the Australian regulators may set a precedent for domestic REE operations; in other words, will Chinese companies now find it easier to take a controlling stake in an Australian REE project if they commit to offering off‐take to other parties?

East China Mineral Exploration and Development Bureau (ECE) will invest $A47.85 million in Globe Metals and Mining (ASX:GBE) to advance its niobium, tantalum and REE projects in Africa. This follows an earlier announcement of progress at Globe’s Muambe REE project in Mozambique where drilling hit numerous, high grade fluorite, with associated zones of REE mineralisation including up to 104 parts per million dysprosium.

The significant part of this week’s announcement, however, is that ECE has given an undertaking to Australia’s Foreign Investment Review Board that it will observe an “open source” policy with respect to any REE produced. This specifies that any of Globe’s off-take agreements relating to REE products will occur on an arms-length commercial basis, that any parties wanting to enter into off-take agreements will be given reasonable and commercial opportunity to negotiate, and that any revenues from the sale or supply of rare earth products will be directly referable to market prices.

Apart from its priority Kanyika niobium project in Malawi, Globe is earning an 80 per cent interest in the Machinga REE project in southern Malawi from Resource Star (ASX:RSL) and the company can earn up to 90 per cent in the Mt Muambe fluorite-HREE project in Mozambique.

In the announcement of the “open source” deal, ECE chairman Shao Yi said he understood the importance of transparent and open supply arrangements. ECE also owns 17.51 per cent of Arafura Resources (ASX:ARU). Shao added: “Arafura belongs to Australia and the rare earth belongs to the whole world. ECE has neither any intention nor any justification to control any rare earth company or rare earth product”.

ECE is a Chinese state-owned enterprise located in Nanjing. The company will not only have majority equity in Globe, but a majority of directors at the board table. Settlement of the investment will take place this week.