Rare Earth Industrial Consolidation Involves 5 Leading Companies

Five leading enterprises are involved in the consolidation plan in the rare earth industry in China, including Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Company, Guangdong Rising Nonferrous Metals, Chalco, Minmetals and Ganzhou Rare Earth. Consolidation of the five leading companies with local rare earth enterprises a crucial step to the industrial consolidation. The consolidation plan is expected to be announced around August. Xiamen Tungsten and China Non-ferrous Metal Industry’s Foreign Engineering and Construction Company are unexpectedly excluded in the consolidation plan.

Many market players believe the industrial consolidation will still face many difficulties, especially consolidation between SOEs and local resources.

5 Enterprises Included in the Consolidation
As local rare earth resources consolidation was finished, further integration is implemented across the industry. The five leading enterprises initially included in the rare earth integration plan are local leading enterprises including Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Company, Guangdong Rising Nonferrous Metals, and Ganzhou Rare Earth and SOEs including Chalco and Minmetals.

Xiamen Tungsten and China Non-ferrous Metal Industry’s Foreign Engineering and Construction Company, and Jiangxi Copper are excluded in the list of consolidation, and market players believe the likelihood of integration between each other enterprise is very low.

China announced the Proposals Regarding Promoting Sustainable and Healthy Development of the Rare Earth Industry on May 10th, 2010, requiring China should form a large enterprise-oriented rare earth industry, with the consolidation ratio of the top three ion-absorbing type rare earth enterprises in south China reaching 80%.

Baotou and Ganzhou are major domestic rare earth producing regions, with rare earth output value accounting for 2/3 of total domestic rare earth output value. North China has formed rare earth agglomeration with core enterprise of Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Company, while high strategic value ion-absorbing type rare earth in south China lack core enterprise and business are disordered.

                  

Rare Earth Consolidation Facing Difficulties
The manager of the MIIT expressed the rare earth consolidation will be implemented locally first, and then nationwide, which is favorable for the covering of the rare earth industry chain, environmental protection and the realizing of sustainable development target.

China has commenced rare earth consolidation in Jiangsu, Hunan, Yunnan, Guangdong and Sichuan last year.

The MIIT Deputy Director Su Bo said the rare earth industry will put emphasis on acceleration of large rare earth enterprise construction. That market understands rare earth consolidation will be implemented beyond local levels.
The rare earth consolidation between SOEs and local enterprises are still facing difficulties, but local enterprises will discuss how to cooperate with SOEs.

Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Company is absorbing backbone enterprises in Sichuan and Shandong to construct China Northern Rare Earth Group jointly with Gansu Rare Earth New Materials Company,


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