Every day the wedge is driven deeper into the REE market, separating east and west and setting the scene for the rise to dominance of "Son of Fortescue"

Vital Metals to sell rare earths stockpile within Canada, not to China

Vital Metals won't be selling its stockpile of Canadian-mined rare earth elements to China after all.

On June 16, the Australian-owned firm, which owns and operates a portion of the NWT’s Nechalacho rare earths mine, announced that it will be selling its existing stockpile to the Saskatchewan Research Council (SRC) for $3 million instead. SRC bills itself as Canada's second largest research and technology organization, and aims to support innovation and industrial commercialization for its clients.

The new deal was facilitated by Natural Resources Canada, a branch of the federal government, with the aim of keeping Canadian resources inside the country.

"This agreement highlights the strategic value and importance of the Nechalacho rare earths project, and the prioritization of a rare earths value chain in Canada," said Vital Metals' managing director and CEO Geordie Mark.

Last year, Vital Metals sold a 9.9-percent ownership stake to a subsidiary of Chinese rare earths company Shenghe Resources, which is owned in part by the Chinese state. In tandem with the deal, Australian-based Vital Metals planned to sell its existing rare earths stockpile to the Chinese firm. This approach sparked immediate concerns among stakeholders and other Canadians, as China already dominates the global rare earths market, and looked to be gaining even more influence through the transaction. The deal also ran counter to Vital Metals' previous claim that it aimed to become "the lowest cost producer of mixed rare earth oxide outside of China.”

Evidently, the federal government shared those concerns, having blocked the sale of the stockpiled resources and found a new buyer within Canada.

"I’m very happy that our federal government facilitated the deal, as it reinforces their commitment — through Natural Resources Canada, and with all departments — to advance a strong critical mineral supply chain in the country and Western world, and outside of China," said Tom Hoefer, senior advisor to the NWT Chamber of Mines. "I’d say many people are probably happy for the Canadian government to have intervened in Vital's plans to sell its stockpile to China.

"It also keeps the rare earth elements here in Canada, which fits Canada’s commitment to create a domestic critical minerals supply chain under the national Critical Minerals Strategy."

Shenghe was expected to pay $2.6 million for Vital's rare earths stockpile, meaning the Australian firm will actually make slightly more money by selling within Canada.