Chinese rare earth miner Shenghe Resources (盛和资源) has agreed to buy a 12.51% stake in ASX-traded Greenland Minerals and Energy (GME), the company behind the Kvanefjeld (Kuannersuit) uranium+REE project in Greenland. That will already make Shenghe Resources, through a subsidiary, the largest individual shareholder in GME. The agreement gives Shenghe the option to increase its participation up to a 60% stake once the project enters the development stage, Shanghai Stock Exchange disclosures show. The deal is subject to the approval of GME shareholders, Australia’s Foreign Investment Review Board and Chinese authorities, with a late-November deadline. Shenghe’s stake will be owned by it subsidiary Leshan Shenghe 乐山盛和.

At A$.037, the price agreed is less than the A$.06 GME shares closed at when they suspended trading two days ago, but an improvement over the A$.02 it hit last December, when talks with Shenghe reportedly started. Indeed, GME’s recent rise might be what triggered Shenghe to close the deal, rather than wait for the Kvanefjeld project to get a production permit from the Greenlandic authorities.

Chengdu-based Shenghe (listed in Shanghai) is a major consolidated rare earths company. More than a quarter of its shares are owned by state institutions. Its biggest shareholder (~20%) is the Chengdu Institute of Multipurpose Utilisation of Mineral Resources (中国地调局成都综合所, IMUMR), a geological research institution ultimately subordinated to the Ministry of Land and Resources. State ownership also occurs at the provincial level, through the Sichuan Geological and Mineral Resources Company (四川省地质矿产公司), who have conducted exploration activities in Laos and Mozambique. But the name to remember is IMUMR, the central-government majority shareholder. Shenghe’s current identity goes back to a reverse takeover in 2013; its predecessor (i.e. what was reversely taken over) is precisely Leshan Shenghe, established in December 2001 (the IMUMR stake goes back to at least ’02, the Sichuan gov’t company’s to ’04).

Shenghe’s biggest private shareholder is Wang Quangen 王全根, but he isn’t unconnected to the IMUMR. He worked at the Institute for 26 years, the last nine of which overlapped with functions at Shenghe. That is, while he worked as an engineer at a state research institution, he went on to own, together with his wife, a significant share in a large Shanghai-listed company closely connected to the Institute. How he became so rich is, says a Xinhua report, an “enigma“. Another non-state shareholder in Shenghe is Sichuan Giant Star Group (四川巨星集团). Shenghe is chaired by Hu Zesong 胡泽松, vice Party secretary at the Institute.

The latest arrival to Greenland’s mining ecosystem is thus a company intimately connected to a Sichuan-based geological research institution controlled by the central government.

Shenghe has been looking for rare earth resources abroad recently, including a purchasing agreement with Tantalus for its Madagascar production and plans to buy 90% of Vietnam Rare Earths.