Fangda commits to purchasing at least 20% of niobium output from the Araxá Project in Minas Gerais, with upfront payment to St George
01/20/2025
Australian mining company St George and China’s Liaoning Fangda Group, one of the world’s largest steel producers and heavy mining equipment manufacturers, signed a memorandum of understanding to collaborate on the development of a niobium and rare earth elements extraction project in Araxá, Minas Gerais. St George expects to finalize similar agreements in the coming weeks.
Under the agreement, Fangda has committed to purchasing at least 20% of the niobium output from the Araxá Project, providing upfront payments to support the project’s financing. Production, projected to begin in 2027, is expected to reach 5,000 tonnes of niobium annually. Thiago Amaral, St George’s director in Brazil, noted that Fangda also manufactures mining equipment that could be utilized at the Araxá site, located adjacent to CBMM’s mine. Additionally, Fangda will provide technical consultancy and support for the mine’s development and construction.
The deal took approximately four months to negotiate. “As a private company with significant niobium consumption, Fangda proved to be the ideal partner for this process,” said John Prineas, executive chairman of St George Mining.
Mr. Prineas noted that discussions with other potential buyers are ongoing, with plans to secure more niobium pre-sale agreements in the coming weeks. In addition to Fangda’s commitment, St George has a similar deal with SKI HongKong Limited (SKI), which also involves pre-purchasing 20% of the Araxá Project’s niobium output.
The pre-sale agreements come as a strategic solution for St George, which has faced difficulties raising funds.
Last week, St George announced commitments to raise A$20 million in a new share placement on the Sydney Stock Exchange. The funds will be used to pay for the Araxá Project.
The Araxá Project encompasses three licenses owned by Itafos Araxá Mineração e Fertilizantes, a subsidiary of Itafos. In August 2024, St George signed a binding agreement to acquire the project for $21 million plus a 10% equity stake in St George. Of the total, $10 million has already been paid, with $6 million due by May 2025 and the remainder by February 2026.
St George aims to produce 5,000 tonnes of niobium annually by 2027. For comparison, CBMM, the global leader in niobium production, processes 150,000 tonnes annually.
To advance the project, St George will conduct additional drilling to evaluate the mine’s resources, with only 10% of the area currently explored. The next phase involves establishing an industrial complex, estimated to cost R$2 billion. Financing for this phase will rely on loans and additional pre-sale agreements for niobium.
The primary product will be ferroniobium, although the company is also considering producing niobium oxide. The Araxá mine contains reserves of rare earth elements, which St George also plans to exploit.
Mr. Prineas emphasized that the company does not intend to compete directly with CBMM, which dominates 80% of the global niobium market and is controlled by the Moreira Salles family. “Our goal is to meet the demand currently unmet by CBMM and supply the market,” Mr. Prineas said.
*By Cibelle Bouças — Belo Horizonte
Source: Valor International