(Yicai Global) Oct. 20 -- Shenghe Resources Holding, a Chinese developer of rare earths, has taken steps to secure its supply of raw materials used in electronics and new energy vehicles through an Australian mining affiliate in Tanzania.

The non-binding memorandum of understanding signed between Shenghe Resources Singapore and Australia’s Peak Rare Earths involves the purchase of materials and equity in the Ngualla project in the East African country, the Chengdu-based firm said in a statement yesterday. The parties are linked as the Singaporean unit of Shenghe has a nearly 20 percent stake in the Perth-based mining firm.

Shenghe would buy at least three-quarters of all products coming from the project, including high-grade mineral concentrate and mixed rare-earth carbonate, for seven years or even longer, based on the preliminary agreement. The pair has also talked about potential technological collaboration. Moreover, they will discuss the possibility of Shenghe acquiring a stake in the project.

The MoU will play a positive role in accelerating the development of the Ngualla project, Shenghe said. A smooth implementation of the pair’s cooperation will also support the company’s business expansion in Africa and beyond, it added.

Shenghe has two major business segments, including rare earth elements, as well as zirconium and titanium ores. It has a relatively complete industry chain in REE, involving mining, smelting, separation, and deep processing. But the zirconium and titanium business only focuses on the separation process.

In order to further develop the African raw materials, Peak Rare Earths has a project called the Teesside Refinery in the United Kingdom to deliver materials used in permanent magnets found in electric vehicles.

In the first half of this year, Shenghe more than doubled its net profit to CNY1.3 billion (USD186.4 million) from a year ago, according to its earnings report. Revenue surged by 80 percent to CNY8.8 billion.

Editor: Emmi Laine, Xiao Yi