Magnetics Business & Technology - November/December 2024 - 8

FEATURE ARTICLE
Shenghe to Acquire Neo's Separation Assets in China for $30 Million; Backs Peak's Tanzania
Project for $96 Million
global sourcing platform. We look forward to our continued
partnership, " Neo discontinued ZAMR's rare earth separation
operations in April of this year, shifting operations to the newly
constructed downstream rare earth specialty oxides facility,
NAMCO, in the same region.
Through its strong supply chain relationships both inside and
outside of China as well as its 20 years of experience in the
rare earths industry, Shenghe is seen as having the capability
to expand JAMR's access to raw materials. Shenghe is also
expected to integrate ZAMR's remaining assets and employees
in its operations. JAMR has been a continuously operating asset
in the Neo's portfolio for three decades, earning a reputation as a
leading producer of specialty heavy rare earth products for global
markets.
Shenghe Resources continues building a global, vertically integrated
magnetic materials and rare earths industrial chain that involves
minerals resources, major separations operations, concentrates, compounds,
oxides, metals and magnets spanning its manufacturing base
in China and investment ventures elsewhere in the world.
Chinese rare earths company Shenghe Resources continues to
build its footrprint as a globally connected rare earths company.
In two recent moves, it pledged to invest $96 million in Australian
minerals firm Peak Rare Earths that provides critical funding for
its mine development in Tanzania and agreed to pay Torontobased
Neo Performance Materials $30 million to acquire processing
assets of Neo in China.
In August, Neo announced that it has entered into agreements to
sell its 86% equity interest in Jiangyin Jiahua Advanced Material
Resources Co., Ltd. (JAMR) to Shenghe for $25.6 million
cash; and 100% of the equity in Zibo Jiahua Advanced Material
Resources Co., Ltd. (ZAMR) to Shenghe for $4.1 million cash.
JAMR sales proceeds represent a 10.7x multiple on average
trailing five-year EBITDA for the facility. The ZAMR facility was
valued using an asset-based approach, as the facility was closed
in the second quarter of 2024. The transactions are expected to
close in the fourth quarter of this year.
Neo will retain a 9% interest in JAMR and plans to execute an
agreement securing the exclusive right to distribute JAMR's
heavy rare earth products outside of China for an initial term of
5 years, a move expected to provide Neo customers outside of
China with continuity of supply for premium products like dysprosium
for multi-layer ceramic capacitors and medical-grade
gadolinium.
" As the rare earth industry in China has
evolved, this is the right time to transition
our rare earth separation businesses
inside China to an integrated rare earth
industry leader, " explained Rahim Suleman,
CEO of Neo. " It is our view that
larger production and sourcing scale is
required to create more value for these
midstream assets. We are pleased to
have found a partner for this vision in
Shenghe, a company with proven commercial
excellence and an established
" We are pleased to partner with Neo on this mutually beneficial
agreement for both our companies and our customers. Both
JAMR and ZAMR have had excellent reputations over the last
three decades in Neo's ownership and management. By integrating
them into Shenghe's large, global platform, we look forward
to the next growth chapter for these assets, " said Huang Ping,
the acting chairman of Shenghe.
Investing for Peak's rare earths mine in Tanzania
A month earlier, Australian minerals company Peak Rare Earths
forged a transformational partnership with Shenghe in which it
agreed to invest $96 million in the company. The agreement creates
a fully funded project solution for Peak's Ngualla rare earths
development project in Tanzania and secures offtake supply from
it for Shenghe.
" We continue to
believe that the
Ngualla Project
is the premier
undeveloped rare
earth project in the
world, " commented
Huang Ping,
Deputy Chairman of
Shenghe. Shenghe
becomes Peak's
largest shareholder
with about 19.9%
shareholding.
Rahim Suleman, CEO
of Neo Performance
Materials
8 Magnetics Business & Technology * November/December 2024
Deputy Chairman Huang Ping, and founder
Wang Quangen of Shenghe sign the agreement
with Peak Chair, Russell Scrimshaw.
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