Jan 12 (Reuters) - Australian rare earths miner VHM

said on Monday it had terminated its offtake agreement

with China's Shenghe Resources for its Goschen rare

earths project after conditions precedent to the deal were not

met.

Shares ‌of VHM rose as much as 12.1% to A$0.465 in early

trading, set for their best ​day since November 10, if current

moves hold.

VHM said the decision underscored ‍its plan to pursue a

wider pool of potential ⁠buyers as global ⁠demand for critical

minerals from buyers outside China grows.

The company said it hired Macquarie Capital to ‌lead its

discussions with offtake and potential ​project partners for its

Goschen project in Australia's Victoria state.

The Goschen project is VHM's flagship development, focused

on extracting critical minerals ⁠such as rare earth elements ‍and

titanium minerals ​that power clean energy systems, electric

mobility, advanced defence applications and modern digital

technologies.

The agreement with Shenghe, announced in 2024, set terms for

the ‍supply of 6,400 metric tons per year of a valuable rare

earth mineral concentrate, among others, from VHM's Goschen

project, for an initial three-year term.

The company said the project aimed to start producing rare

earths and mineral sands concentrates by late 2027 and the end

of the offtake ​deal ‍with Shenghe meant 100% of the products

would be available for purchase.

In 2025, the Melbourne-headquartered firm secured up to $200

million in funding ​from the U.S. Export-Import Bank (EXIM) to

support development of the Goschen project.

Shenghe has been expanding in Australia's rare earths

sector, buying nearly 20% of Peak Rare Earths in 2022 and

signing a deal that year to purchase products from Peak's

Ngualla project in Tanzania.

Last September, partly state-owned Shenghe took full control

of Peak after the firm ​had greenlit the Chinese rare earths

producer's $130 million buyout offer.

The deal came as Australia considered a price floor to

support critical minerals projects and position itself as an

alternative to China, ‍the dominant supplier.