This article first appeared on GuruFocus .
State-owned China Rare Earth Group is in talks to acquire Shenghe Resources, which holds 3% of MP Materials Corp. ( NYSE:MP ). Two sources said discussions began earlier this year and that the Chinese group wants a controlling stake. Neither knew when a deal might be announced or completed. MP Materials shares were up 1.43% premarket.
The US Department of Defense became MP's largest shareholder after investing last year. MP has repeatedly said neither Shenghe nor the Chinese government has any control over its operations.
Shenghe is one of the last leading Chinese rare earth miners and refiners with private ownership, and a deal would complete a decades-long push to bring the sector under state control. It would also improve Shenghe's access to the mining and separation quotas Beijing uses to manage supply, which are granted to state-run companies and passed down to subsidiaries.
