Western Dream of China-Free Rare Earths Crumbles
For years, an African mining project promised to liberate Western nations from their dependence on China for rare earth elements. Recently, that dream collapsed when the operation fell into Chinese hands. The failure of Australian mining company Peak Rare Earths to establish a China-free supply chain offers a stark lesson in how Beijing has achieved global dominance over critical minerals.
The sale of Peak to Chinese rare-earth giant Shenghe Resources earlier this autumn represents a strategic pattern that will see Beijing receiving all rare earths from Tanzania by 2029. Tanzania stands as one of the world's major emerging sources of these crucial elements, according to Benchmark Mineral Intelligence.
The Strategic Takeover Timeline
In 2010, Australian company Peak discovered one of the world's finest rare-earth deposits in Tanzania. Unlike typical operations that ship ore to China for processing, Peak planned to refine the materials in the United Kingdom, creating an integrated operation entirely outside Asian control.
However, China's existing control over most major rare-earth mines created significant challenges. Massive Chinese exports kept global prices artificially low, making it difficult for Western companies to secure funding for new mining ventures.
By 2019, then-CEO Rocky Smith approached foreign governments for assistance in developing the Tanzania mine. His timing appeared perfect—the United States under President Trump was engaged in a trade war with Beijing, and Chinese state media had explicitly threatened to use rare earths as a geopolitical weapon.
The United States risks losing the supply of materials that are vital to sustaining its technological strength, warned a commentary in China's People's Daily during this period.
Smith secured initial interest from the Overseas Private Investment Corporation, a U.S. government institution funding developing world projects. However, Tanzania's then-leader John Magufuli opposed foreign mining projects, causing the U.S. government to withdraw support. Other Western governments similarly declined to provide funding.
Chinese Strategy Prevails
The situation changed in 2021 when President Magufuli died in office and was succeeded by Samia Suluhu Hassan, who demonstrated greater openness to foreign mining projects. Despite this political shift, Peak's investors grew increasingly impatient.
In 2022, a cornerstone investor—U.K. private-equity firm Appian Capital Advisory—sold its 20% stake in Peak to Shenghe Resources. The Chinese company, partially state-owned, has systematically acquired stakes in promising rare-earth deposits across Tanzania from Western companies that initially controlled them.
This would have provided a large part of the U.K. and Europe's rare earths, but there was zero backing, explained Michael Scherb, Appian's CEO, regarding their attempts to secure U.K. government funding.
Peak's management initially insisted that even with significant Chinese ownership, they would maintain their plan to supply non-Chinese buyers. This commitment quickly faltered as rare-earth prices dropped in 2022 due to China ramping up production.
The company underwent leadership changes, appointing banking veteran Bardin Davis as CEO and a new executive chairman. Shortly afterward, Peak announced an agreement where Shenghe would receive between 75% to 100% of the mine's output for seven years, plus a board seat.
Western governments began treating Peak as part of the nexus with China, according to Davis, making it difficult to secure Western funding for mine development. Simultaneously, Peak risked losing its Tanzanian mining license without demonstrating progress.
The company launched a global search for joint-venture partners or buyers but received only one indicative offer—from Shenghe.
Geopolitical Consequences and Western Response
In 2024, Peak announced a joint-venture arrangement with Shenghe to develop the mine. However, when Beijing implemented new export controls on rare earths in response to Trump's tariffs, the partnership collapsed. Peak cited recent geopolitical and regulatory developments as the reason for scrapping the joint venture.
Davis identified a major problem: Beijing had introduced regulations restricting the export of Chinese rare-earth technology, making collaboration between Australian and Chinese companies increasingly difficult.
In May 2025, Shenghe moved to acquire all of Peak, offering a premium roughly eight times higher than average mining and metals acquisitions, according to S&P Global Market Intelligence. Shenghe considered the Tanzanian mine the premier undeveloped rare earth project in the world.
A last-minute opportunity emerged when U.S. private-equity firm General Innovation Capital Partners made a nonbinding offer exceeding Shenghe's bid. However, Peak's board expressed concerns about the firm's limited mining track record and ability to fund the acquisition. The company rejected the offer, worried about breaking its exclusivity agreement with Shenghe.
Ultimately, shareholders received approximately four times the pre-announcement share price from the Shenghe sale. In October 2025, Peak was formally delisted from the Australian stock exchange.
The Chinese have a long view on this stuff and the money part is not a big deal to them, observed former Peak CEO Rocky Smith. Peak is just one more piece, one more rare-earth deposit that they are going to be bringing into China.
Following Shenghe's acquisition, the U.S. and Australia agreed to strengthen tools for reviewing and deterring critical minerals and rare earths asset sales on national security grounds. However, mining experts note there are limited legal avenues to prevent Australian-listed companies—which conduct much of the world's mineral exploration—from selling their mines abroad.
Chinese companies consistently outbid Western rivals, benefiting from generous state support and expertise in navigating developing countries where corruption often presents challenges. The European Union recently opened an investigation into the proposed sale of Anglo-American's nickel operations in Brazil to a Chinese state-owned subsidiary, citing potential loss of crucial supply for European steelmakers.
Canada has similarly strengthened investment laws to complicate Chinese company acquisitions and has forced some Chinese firms to divest from strategic assets.
