St George Mining Ltd (ASX:SGQ) has signed a strategic memorandum of understanding (MoU) with one of the world’s biggest steelmakers, Liaoning Fangda Group, to progress the development of the Araxá niobium-REE (rare earth elements) project in Brazil.

The MoU will allow Fangda – through its subsidiary Beijing Fangda Carbon-Tech Co. – to consider several commercial arrangements with St George, including an offtake agreement in which it could secure at least 20% of Araxá; the provision of technical advice on mine development and construction, and various funding options.

The latter could include an investment in St George or pre-payment for offtake.

The agreement – signed on January 15 – is anticipated to lead to a binding partnership between the parties, to be secured within nine months of the MoU.

Niobium is an important element in Fangda’s business as one of the world’s top 16 steel producers; the metal is essential for its high-strength steel products used in construction, bridges, ships, autos, and heavy mining equipment.

The company produces around 20 million tonnes of steel products per year and is aiming to push this to 50Mtpa as 2025 work begins.

“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 chairman John Prineas said.

“The global niobium sector has only three primary producers – the global leader being CBMM, with its flagship project located 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 has been trading at 2.3 cents.

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