Peak, Shenghe ink offtake deal for Ngualla rare earth project in Tanzania

Peak Rare Earths and Shenghe Resources have inked an offtake deal and a memorandum of understanding (MoU) for the Ngualla rare earth project in Tanzania.

According to the offtake agreement, a minimum of 50% of the rare earth concentrate produced at the Ngualla project in Tanzania will be supplied to Shenghe initially. Depending on further binding agreements, Shenghe has the potential to receive the entire production output from the Ngualla mine.The initial duration of the offtake agreement has been set at seven years with a room for extension.

Strategic cooperation

Shenghe is obligated to both pay for and take delivery of the rare earth concentrate produced. The pricing of the product will be market-driven, determined by the value of the contained rare earth oxides with certain deductions such as value-added tax (VAT), trading fees, refining recoveries, charges, and margins.

This MoU outlines their collaboration in assessing an integrated engineering, procurement, and construction (EPC) solution as well as project funding for the Ngualla project. Shenghe will play a key role in arranging and delivering a turnkey, fixed-price EPC solution for the Ngualla project. The Beijing General Research Institute of Mining and Metallurgy (BGRIMM) might be involved as an EPC sub-contractor.

Peak Rare Earths will appoint a team to oversee the EPC solution’s delivery. Shenghe will provide funding for the project based on mutually acceptable terms. The companies will also explore the possibility of Shenghe acquiring a significant non-controlling interest in the project.

Peak Rare Earths’ executive chairman, Russell Scrimshaw, emphasized the importance of the strategic cooperation between the two companies. The combination of the offtake agreement and the non-binding MoU sets Peak apart and supports a successful project funding solution for the Ngualla rare earths project.