China Rare Earth Group Seeks Acquisition of Shenghe Resources

State-owned China Rare Earth Group is in negotiations to acquire a controlling stake in Shenghe Resources, a move that would consolidate the Chinese government's control over the rare earth mining and refining sector. Reports indicate that talks have been underway since early 2026 to bring one of the last privately owned leading Chinese rare earth firms under state control.

The acquisition would grant China Rare Earth Group indirect ownership of Shenghe's foreign assets, including a 3.11% stake in MP Materials Corp. This creates a potential conflict of interest because the United States Department of Defense is the largest shareholder of MP Materials Corp, having purchased $400 million in preferred stock and warrants. The deal occurs as Washington seeks to reduce its reliance on China for materials critical to defense systems, electronics, and electric vehicles.

While MP Materials Corp maintains that neither Shenghe nor the Chinese government controls its operations, the transaction could increase geopolitical tensions regarding the security of the U.S. domestic supply chain. In a recent filing to the Shanghai stock exchange, Shenghe Resources denied the reports, stating that its controlling shareholder, the Institute of Multipurpose Utilization of Mineral Resources, has no plans to transfer the company's controlling stake to external parties.