How Two Western Assets Became Part Of China’s Long Game

Over the past decade, two significant narratives have shaped the rare earth elements (REE) market: the revival of the Mountain Pass mine in California and the decline and eventual sale of the Ngualla project in Tanzania. While each story stands on its own, their interplay illustrates a critical trend: China has consistently out-strategised and out-manoeuvred Western capital markets. Mountain Pass may have remained operational, but at a cost that ultimately favoured China. Conversely, Ngualla, recognised as one of the world’s premier neodymium-praseodymium (NdPr) deposits, slipped from Western control at a fraction of its true value. This analysis is not merely commentary; it reflects two converging timelines with significant implications.

Mountain Pass: A Western Asset Sustained Through Chinese Leverage

Mountain Pass experienced a dramatic collapse into bankruptcy in 2015 after the Molycorp expansion proved unsustainable. This expansion was predicated on a temporary spike in NdPr prices, triggered by the China–Japan territorial dispute. Following the West's victory in the WTO case against China’s export quotas, Beijing retaliated by flooding the market, which led to a steep decline in prices and rendered Molycorp’s new processing circuit economically unviable.

In 2017, a consortium, including Shenghe, acquired the asset from bankruptcy. Shenghe's investment of approximately US$50 million in offtake and prepayment support facilitated the mine's restart. In return, Shenghe secured 100% of Mountain Pass' concentrate and nearly a 10% economic stake.

From 2017 to 2020, Mountain Pass operated primarily as a mining entity. While the upstream ore remained under U.S. ownership, the value-added processing occurred in China. When MP Materials went public via SPAC in 2020, U.S. investors transformed Mountain Pass into a strategic asset. Federal programmes reinforced this narrative, resulting in a significant valuation increase, with MP Materials trading at an estimated US$10–12 billion by 2025. For Shenghe, this meant that its initial US$50 million investment had appreciated to approximately US$800–950 million. Although Mountain Pass was nominally Western-owned, a substantial portion of the economic value generated from its revival ultimately flowed to China.

Ngualla: A High-Quality Deposit Undermined by Delays

Discovered between 2009 and 2010, Ngualla quickly emerged as one of the most promising NdPr deposits worldwide, boasting high-grade ore near the surface, low radionuclide levels, a straightforward mining plan, and successful pilot-scale metallurgical tests. However, the project faced significant challenges, including stalled Special Mining Licence approvals and a withdrawal of investor interest, rendering Western financing nearly impossible.

Despite efforts by Peak Resources to derisk the project and the delivery of an updated Bankable Feasibility Study (BFS) in 2022, prolonged regulatory uncertainty weakened the company's financial standing. Between 2023 and 2024, Shenghe acquired a 19.9% stake in Ngualla and, in 2025, moved to acquire the project outright for approximately US$90–100 million. While Peak Resources advanced the project through feasibility studies, major changes to Tanzania’s mining legislation in 2017 stymied momentum. The acquisition price represented a mere fraction of the deposit's underlying NdPr value, highlighting a significant disconnect between the resource's fundamental quality and the capital market's willingness to support it.

The Convergence: Two Timelines, One Outcome

When viewed in tandem, the dynamics of both situations become evident. Shenghe's MP Materials valuation surged by nearly a billion dollars from 2017 to 2025, while Ngualla's valuation plummeted due to regulatory delays and a lack of Western financing. The result was straightforward: a strategic Western asset that succeeded (Mountain Pass) and another that faltered (Ngualla) both inadvertently bolstered China’s position—one through capital appreciation and the other through acquisition.

The Western Role: Keeping Mountain Pass, Paying the Price

While the West often heralds the revival of Mountain Pass as a strategic triumph, the economic record suggests otherwise. The mine was sustained, but at a significant cost, much of which was paid to China. Without Shenghe’s support in 2017, the restart would not have been possible. Likewise, U.S. investor enthusiasm significantly increased Shenghe’s economic interest. Thus, while Mountain Pass remained operational under Western ownership, the value generated from its revival predominantly enriched Shenghe.

The Reality of the Ngualla Acquisition: A 2023 Decision Point

Shenghe's aim to acquire Ngualla was already established in 2023, independent of MP Materials' subsequent valuation increase. Shenghe would have sourced the necessary capital regardless. What shifted between 2023 and 2025 was the relative significance of the acquisition. The uplift in MP’s valuation merely diminished Shenghe’s accumulated capital gain from its Western asset exposure. The US$90–100 million needed to acquire Ngualla was absorbed within the broader capital gains context, enabling Shenghe to enhance its NdPr resource base by over 150,000 tonnes with limited financial impact.

Conclusion: One Pattern, Two Case Studies

Mountain Pass and Ngualla did not exist in isolation; they are interwoven elements of a larger narrative. China adeptly supported Western revival when it served its interests while capturing the value-added opportunities that others overlooked. Through this strategy, China accumulated capital gains realised in Western markets, which were then deployed to secure global resource positions.

In contrast, the West successfully financed Mountain Pass’s recovery but failed to protect Ngualla’s development. Consequently, China fortified its strategic position through both outcomes. These parallel stories culminate in a singular conclusion: China has masterfully outplayed Western capital markets, leveraging their mechanisms to enhance its strategic standing in the NdPr landscape.

Sources and Supporting Documents

MP Materials / Mountain Pass

MP Materials / Fortress Value Acquisition Corp, Form S-4 (Sept 2020)

MP Materials 10-K filings (2021–2024)

Form 8-K (April 2025)

U.S. Bankruptcy Court Case 15-11357 (2017 acquisition)

PRC MOFCOM Export Regulations, April 2025

U.S. Department of Defense funding announcements (2025)

Peak Resources / Ngualla

Peak Resources ASX Announcements (2017 BFS, 2022 BFS, 2023–2025 regulatory updates)

ASX Substantial Holder notice (26 March 2024)

Scheme Implementation Deed (15 May 2025)

Scheme Booklet & Independent Expert Report (Aug 2025)

Peak Resources resource statements and technical disclosures

Tanzania Written Laws (Miscellaneous Amendments) Act 201

Market and Regulatory Context

WTO Case DS431 (2014 ruling on Chinese export restrictions)

USGS Mineral Commodity Summaries, Rare Earths (2015–2025)

Asian Metal / SMM rare earth pricing archives

Industry reports on NdPr demand and price cycles