St George Mining Ltd (ASX:SGQ) has inked a memorandum of understanding (MoU) with one of the world’s largest steelmakers, Liaoning Fangda Group, through its wholly owned subsidiary Beijing Fangda Carbon-Tech Co Ltd.
Developing Araxá
Fangda is a leader in mining and metallurgy equipment manufacturing and a major consumer of niobium – which is where St George Mining comes in.
The MoU outlines a potential collaboration to develop St George’s Araxá Niobium-Rare Earth Elements (REE) project in Minas Gerais, Brazil and secure long-term offtake, financing and technical support for the high-grade project.
The partnership will help steward the project toward feasibility studies and a final investment decision, with the parties targeting a binding partnership agreement within nine months.
The MoU includes key terms such as exclusive rights for Fangda to acquire 20% of the niobium products from Araxá for an initial five years, with an option to extend for another five.
Pricing would be market-linked and Fangda may provide a prepayment loan facility as part of its financing support.
The MoU allows St George to pursue additional partnerships and agreements with other investors or strategic partners.
Need for niobium
Fangda is the 16th largest steel producer globally and is on track to expand production to 50 million tonnes per annum.
To do this, it needs niobium – the alloying element is critical for producing high-strength steel used in construction, heavy machinery, ships and automobiles.
Fangda’s mining equipment division Northern Heavy Industries offers another potential avenue for collaboration, with expertise in developing cutting-edge technologies for efficient mine operations.
St George expects to complete its 100% acquisition of the Araxá project in Q1 2025, marking a key milestone in its strategy to establish the project as a globally significant supplier of niobium and REEs.
The MoU points to confidence in the Araxá project’s potential and the long-term strategic importance of niobium in global industrial markets.
“The relationship with Fangda – through potential financial and technical support as well as mine development – is another key milestone in de-risking the project,” St George executive chair John Prineas said.
Three primary producers worldwide
“The global niobium sector has only three primary producers – the global leader being CBMM, with its flagship project immediately adjacent to the Araxá Project.
“With extensive near-surface niobium mineralisation already confirmed by historical drilling at the Araxá Project – including more than 500 intercepts of +1% Nb2O5 – as well as access to existing regional infrastructure, St George is continuing to position itself to be the next global player in niobium.
“St George’s ability to attract global giants like Fangda speaks volumes to the potential of the Araxá Project and also recognises the high-performance in-country management established by St George to drive project development.”
St George has entered into a conditional binding agreement for the 100% acquisition of the Araxá Project and expects to complete the acquisition in Q1 2025.
In anticipation, St George has assembled a highly experienced team in Brazil to oversee the first stage of development and will be well positioned to kick off immediate on-ground exploration.