St George’s Araxá Project Faces Uncertainty as MoU with Fangda Remains Non-Binding

Strategic Alliance with a Steel Industry Powerhouse

St George Mining Limited (ASX: SGQ) has taken a significant step forward in advancing its Araxá niobium-rare earth elements (REE) project in Brazil by signing a Memorandum of Understanding (MoU) with Liaoning Fangda Group, one of the world's largest steel producers and heavy mining equipment manufacturers. This MoU, announced on 15 January 2025, outlines a framework for collaboration that could see Fangda secure a substantial stake in the project's output and provide critical financial and technical support.

Fangda currently produces around 20 million tonnes of steel annually and is ambitiously expanding to 50 million tonnes per annum, potentially elevating it to a top-five global steel producer. Niobium is a vital alloying element in high-strength steel products used extensively in infrastructure, automotive, shipbuilding, and heavy machinery sectors, areas where Fangda has significant market presence.

Offtake and Financing Opportunities

The MoU contemplates Fangda obtaining exclusive rights to acquire at least 20% of the niobium products from the Araxá project over an initial five-year term, with an option to extend for another five years. Pricing would be linked to market reference prices, and Fangda may also provide a prepayment loan facility to support project development. Additionally, Fangda's expertise in mining and metallurgy equipment, through its subsidiary Northern Heavy Industries Group, could offer valuable technical assistance during mine construction and operation phases.

While the MoU is non-binding and allows St George to pursue other partnerships, it represents a critical de-risking milestone for the Araxá project. St George's Executive Chairman, John Prineas, highlighted the significance of attracting a global steel giant like Fangda, noting it underscores the project's potential to become a major player in the global niobium market, which currently has only three primary producers.

Positioning Araxá as a World-Class Niobium Supplier

The Araxá project benefits from extensive near-surface niobium mineralisation, with historical drilling confirming over 500 intercepts exceeding 1% Nb2O5. Its proximity to existing infrastructure and adjacency to the world-leading CBMM niobium project further enhances its strategic value. St George is on track to complete its 100% acquisition of the project in the first quarter of 2025 and has already assembled a seasoned Brazilian team to advance exploration and feasibility studies.

Fangda's involvement could accelerate the project's development timeline and provide a reliable offtake partner, which is crucial in securing project financing and attracting further investment. In addition, Fangda's interest in niobium's applications in lithium-ion batteries and new energy technologies aligns with emerging market trends, potentially opening additional avenues for product diversification.

Looking Ahead

The parties aim to negotiate a binding partnership agreement within nine months, which will be a key event to watch for investors and industry observers. The collaboration between St George and Fangda not only enhances the Araxá project's commercial viability but also signals growing global demand for niobium, driven by infrastructure development and clean energy technologies.