The Failed Crusade to Keep a Rare-Earths Mine Out of China’s Hands
Failure of one Western company to build China-free rare-earths supply is a glimpse at how Beijing has come to dominate the critical minerals
By
Jon Emont
Nov. 22, 2025 11:00 pm ET
For years, a mining project in Africa held the promise of helping free the West from its dependence on China for rare earths. Some weeks back, it fell into Chinese hands.
The failure of Peak Rare Earths, an Australian mining company, to build a China-free supply of rare-earth minerals offers a look at how Beijing came to dominate the global supply of critical minerals—a position it is now
deftly leveraging for geopolitical gain. China has choked off the supply of rare earths to wring key concessions from President Trump in his trade war.
The sale of Peak to a Chinese rare-earth behemoth earlier this autumn is part of a pattern that means that, by 2029, Beijing will receive all the rare earths flowing from Tanzania, one of the world’s major emerging sources of the elements, according to Benchmark Mineral Intelligence. Some liken it to the grip China enjoys today over cobalt production in the Democratic Republic of Congo.
“This is a very strategic loss,” said Gracelin Baskaran, a critical-minerals expert at the Center for Strategic and International Studies. “This increases [Chinese] market power and it increases their market capacity to destabilize an already very fragile market.”
Since China began restricting the supply of rare-earth minerals to the world earlier this year, Western countries have searched for critical-mineral deposits to quickly bring into production—only to find that Chinese companies have already bought up many of the most promising deposits of rare earths, lithium, nickel and others.
In 2010, Australian company Peak had discovered one of the world’s best rare-earth deposits in Tanzania. Instead of shipping the ore to China, it planned to refine it in the U.K., developing an integrated operation outside of Asia.
By then, China already controlled most of the world’s major rare-earth mines. Huge Chinese exports kept rare-earth prices low, making it difficult for Western companies to raise money to exploit new mines. Years went by.
By 2019, Rocky Smith, then CEO of Peak, asked foreign governments for help in developing the Tanzania mine. His timing was good. Trump was in the midst of a trade war against Beijing, and Chinese state media warned China could use rare earths as a weapon. “The United States risks losing the supply of materials that are vital to sustaining its technological strength,” a commentary in the People’s Daily said.
Smith secured a letter of interest from the Overseas Private Investment Corporation, a U.S. government institute that funded projects in the developing world. However, Tanzania’s then-leader John Magufuli opposed foreign mining projects, and the U.S. government backed off from funding. Other governments also declined to put money forward.
In 2021, Magufuli died in office, and was , who looked more favorably on foreign mining projects.
But Peak’s backers were growing antsy. In 2022 a cornerstone investor, U.K. private-equity firm Appian Capital Advisory, sold its 20% share in Peak to Shenghe Resources, a partly state-owned Chinese rare-earths juggernaut that has steadily bought up stakes in promising rare-earth deposits in Tanzania from Western companies that controlled them.
Appian says that it had made repeated attempts to get U.K. government funding to push the project forward. “This would have provided a large part of the U.K. and Europe’s rare earths, but there was zero backing,” said Michael Scherb, Appian’s CEO.
Peak’s management insisted that even with a large Chinese shareholder, it would stick to its plan to supply buyers outside of China.
Tough choices
That commitment soon began to falter. In 2022 rare-earth prices started dropping as China jacked up production. That year, Peak made Bardin Davis, a banking veteran and Peak executive, its CEO, and appointed a new executive chairman. Shortly afterward, Peak announced an agreement with Shenghe whereby the Chinese company would receive between 75% to 100% of the mine’s output for seven years. Shenghe would also get a board seat.
Since Shenghe had bought its stake in the company, Western governments treated Peak as being part of the “nexus with China,” said Davis. That made it difficult to raise funds from Western funding agencies for its plans to develop the mine. Meanwhile, Peak risked losing its mining license in Tanzania if it didn’t make progress building the mine.
The company embarked on a global search for joint-venture partners or buyers, but only received one indicative offer—from Shenghe. In 2024, Peak announced a plan to enter a joint-venture arrangement with Shenghe under which the Chinese company would invest to develop the mine.
But then, in response to stiff tariffs Trump slapped on China in April, Beijing implemented a new export control regime on rare earths that strangled global supply and sent shock waves through Western industry, which relies on the minerals to make everything from cars to drones and jet engines.
Peak said it would formally scrap the planned joint venture with Shenghe, citing “recent geopolitical and regulatory developments.” A major problem, Davis said, were regulations Beijing had introduced in recent years restricting the export of Chinese rare-earth technology that would have made it difficult for the Australian and Chinese companies to work together.
This May, Shenghe moved in, offering to buy all of Peak for a premium roughly eight times that of average mining and metals acquisitions, according to data from S&P Global Market Intelligence. The price, Shenghe said, was worth it for a mine it had long considered “the premier undeveloped rare earth project in the world.”
A last-minute possibility of keeping the mine in Western hands emerged when a U.S. private-equity company, General Innovation Capital Partners, made a nonbinding offer that exceeded Shenghe’s. Mike Gallagher, a former Congressman known for his hawkish views on China, is a senior adviser to General Innovation.
But while General Innovation says on its website that one of its focuses is materials extraction, it appeared to have a limited track record in mining critical minerals, said Davis, a potential problem for Tanzanian regulators. Peak’s board said the firm hadn’t provided evidence it could fund the acquisition. Peak turned down the offer, concerned about the fee it would have to pay if it broke its exclusivity clause with Shenghe.
General Innovation didn’t respond to requests for comment.
In all, shareholders received roughly four times the pre-announcement share price from the Shenghe sale. In October, Peak was formally delisted from the Australian stock exchange. Shenghe now controls one of the world’s best rare-earth deposits.
The Chinese “have a long view on this stuff and the money part is not a big deal to them,” said Smith, who served as Peak’s CEO until 2020. Peak is “just one more piece, one more rare-earth deposit that they are going to be bringing into China.”
Stopping Chinese state-backed companies from buying up the world’s strategic mines has become an urgent priority for the West. After Shenghe’s purchase, the U.S. and Australia agreed to strengthen tools to review and deter “critical minerals and rare earths asset sales on national security grounds.”
But mining experts say there are few legal avenues to prevent Australian-listed companies, which do much of the world’s mineral exploration, from selling their mines abroad. Chinese companies are outbidding Western rivals, thanks to generous state support and their skill in navigating developing countries, where corruption is often rampant.
Earlier this month, the European Union opened an investigation into the proposed sale of Anglo-American’s nickel operations in Brazil to a subsidiary of a Chinese state-owned mining giant, citing the possibility that European steelmakers would lose access to a crucial supply source. In recent years, Canada has also strengthened investment laws to make it tougher for Chinese companies to buy mines and has forced some Chinese companies to divest from assets.
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