Ellison-backed rare earths play misses deadline to ink Chinese deal

afr.com:

VHM Limited, a rare earths developer backed by mining billionaire Chris Ellison, has missed a third deadline to sign a deal for the sale of the majority of its products to Chinese giant Shenghe Resources.

The Melbourne-headquartered explorer struck a preliminary agreement in October last year to sell the majority of the output from its mine to Shenghe, China’s biggest importer of rare earths concentrate. VHM, at the time, said it aimed for a final deal within four months, in late February.

Chris Ellison is the managing director of Mineral Resources and the largest shareholder in VHM via his private investment vehicle.  

But a year later and three missed deadlines – onFebruary 28,  April 30, and September 30 – the ASX-listed group has still not finalised the deal with Shenghe, which last yearacquired 19 per cent of another ASX-listed rare earths developer Peak Resources for around $39 million.

VHM, in an annual report published on Tuesday, said both sides had agreed to “continue detailed contract negotiations and accordingly, as contemplated in the original MOU, have agreed to extend the date the formal agreement is to be finalised” to December 31.

China supplies about 80 per cent of the world’s separated rare earth elements giving it a stranglehold on an industry that is essential for defence applications like drones and decarbonisation equipment like wind turbines.

China’s dominance of the rare earth industry has concerned governments in Australia, the United States, Japan and other developed economies and triggered taxpayer-backed financing to help stoke new mines and refineries.

VHM, which plans to build a rare earths mine at the Goschen deposit near Swan Hill in Victoria, is in talks with commercial lenders along