Deadline has passed dashed rare earth industry consolidation

From the State Department for the rare earth industry to develop the integration deadline has passed for two months, the North and South Rare Earth Group integration but was not successful, Beijing Chinese Commercial News reporters Zai Jinqi and Fu Baotou and other places interviews found that the current Northern Rare Earth Group Despite the explicit integration methods, namely, In Baotou Steel Rare Earth as a leader, but 12 to be combined business is still in its preliminary assessment of them, did not achieve true integration, not only that, due to the recent rare earth prices skyrocketing, corporate valuation changes, how the future still is uncertain; Southern Rare Earth integration more unfavorable, on the one hand the seven group compete with each other, who will tap delay is difficult to determine, the rare earth industry consolidation targets fall foregone conclusion.

Leading although fixed but hidden risks

By the State Council in 2011 proposed to promote the rare earth industry healthy development of the opinion that this year for the management of the first phase of the "great period", namely, the basic formation of large-scale enterprises as the leading rare earth industry pattern, the South top three conglomerates industrial concentration reaches 80 % or more.

Although the Fifth China Baotou Rare Earth Industry Forum, the Ministry of raw materials Industry Secretary Chen Yanhai repeatedly stressed that after the early series of program development and practical action, integration has been an initial progress, but Beijing Chinese Commercial News reporters Zai Luntan and Xian Chang interviews have found that the integration is not as MIIT expected smoothly.

Among LREE dominated northern integration territory seems to have been more clear in the region leading enterprises Baotou Steel Rare Earth became integrated central force, has been with Inner Mongolia 12 upstream rare earth companies and shareholders signed the "rare earth upstream business integration and restructuring of the Framework Agreement "These companies agreed to free the Baotou Rare Earth transfer of the enterprise 51% stake. "12 companies have not substantially integrated into the company, and now still doing preliminary work in assessment, consideration stage." Rare-Earth General Manager Zhang said, the 12 companies, some do upstream, some do separation , as well as do new materials, different varieties. Although the integrated enterprise will guide its downstream industrial transfer, while the upstream mainly to control the production, improve efficiency based, however, are now faced with a new problem: rare earth prices skyrocketing triggered business valuation changes.

Separatist warlords difficult to set faucet

In contrast to the heavy rare earth-based Southern industry consolidation affected by the above factors heavier.

On the one hand, although so far the region has been formed to China Minmetals, Chinalco Group, the color of shares, Ganzhou Rare Earth Group, Guangdong Rare Earth Industry Group, Fujian Rare Earth Group and Hunan Rare Earth Group dominated the seven forces, however, it is also between them, the game became a Southern Rare Earth integration problems.

Informed sources, the Ministry's goal is to present Southern Rare Earth forty-five main competition integrated into twelve. "But it is very difficult and it does not Northern Rare main competition single, Southern Rare Earth integration process involves not only the central level, also involving local state-owned game between, also involving central and local governments of the game." The insider says.

On the other hand, the South system market is small, scattered, chaotic situation is more serious, a single leading enterprises dominate the entire market is more difficult to achieve.

Enterprises and local attitudes decided to consolidate progress

Investment Advisor in the metallurgical industry researcher Weiqi Ning believes that industry consolidation does not happen overnight, especially in resource companies between the merger and reorganization of the difficulties faced by more, "on the one hand, between enterprises involved in direct economic benefits, market share, controlling, profitability capacity and other factors had important consideration; the other hand, at the national level to promote the industry consolidation, and local governments and some companies exists between economic interests, local government's attitude also affects the integration process of the speed. " Weiqi Ning said.

Regulators seem to realize integration difficulty. Earlier this year, 12 ministries and efforts to promote the merger and reorganization of the nine industries to include rare earths. Recently, in the rare earth industry forum eve of the opening, the Ministry and other eight ministries announced plans this month on the 15th began to organize to carry out a three-month fight against rare earth industry illegal special action, the industry believes that the harsh campaign, to a certain degree of consolidation in the industry paved the way, it is still difficult to achieve in a short time to solve the North rare problems. Moreover, the industry also has voice questioned: large group of established or may trade monopoly.



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Rare earth permanent magnet materials production this year will reach 94,300 tons

At present, the production capacity of rare earth permanent magnet materials 300,000 tons, annual output of 80,000 tons, less than 30% capacity utilization. This year, China's production of rare earth permanent magnet materials is expected to reach 94,300 tons.
    
CCID Research Institute Yuan Kaihong raw material industries, said that although China's rare earth permanent magnet production ranked first in the world, but the market share of high-performance permanent magnet materials less than 10%. Many provinces even without resources and core technology, it has still a large number of new construction projects NdFeB, resulting in a more serious homogenization of vicious competition phenomenon.
    
China Rare Earth Association, Gan Yong called around for prudent investment in low-level permanent magnet industry, should guide investment to the use of rare earth materials transfer components and end products, or to encourage new investment and joint venture financing of existing enterprises, to avoid blindly increasing capacity.



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Weapon wielding three years are not smooth embarrassed Baotou Steel Rare Earth

Since August 7th day laborers Ministry's official website announced the next phase will be conducted nationwide Rare "hitting" the news, China's rare earth stocks share price once again usher rose to the north of rare earth enterprises Baotou Steel Rare Earth, for example, from August 8, after the opening, the company stock for several days rose, 8 August the company opened at 25.6 yuan / share, as of Aug. 12 closing, the company's share price was 29.57 yuan / share, only three trading days, shares rose 15.51 percent.

Although the share price rose, but so far, China's rare earth prices are still in an adjustment phase, while the rare earth prices are around by the upstream enterprises, these include the Baotou Rare Earth. But in recent years, Baotou Steel Rare earth prices have made to protect things, but now I must mention as its "awkward" thing.

Stop insured did not bear fruit

July 1, 2013 evening, Baotou Steel Rare Earth issued a "dilute selected plant shutdown announcement."

Announcement shows that the thin-election plant shutdown is to tie clad (Group) Corporation oxide ore mountains (ie, oxidized ore beneficiation overall migration to the Bayan Obo mine) project implementation, good company overall move to dilute the mill related Baiyun'ebo preparatory work, the company decided to start from 1 July, under the thin election plant shutdown half a year.

In addition, the Baotou Rare Earth's announcement that dilute processing plant was halted, the company smelting separation and functional materials can be used such as downstream industries in recent years, the company reserves the normal production of rare earth concentrates, will not affect the company's downstream industries, not affect the company's annual results goals.

While last year because the industry downturn, Baotou Steel Rare Earth three times Published discontinued insured announcements, other industry leaders Minmetals, Chinalco and Xiamen Tungsten (32.14,1.22,3.95%) followed subsequently discontinued. Discontinued insured in the whole industry a month later, some rare earth stock market appears broad and representative species of rare earth oxide, praseodymium neodymium prices rose 20 percent per ton reached 450,000. But after a brief rise, prices will fall. Eventually, in 2012 Rare annual average price fell by about 40%.

For the year, prices of rare earth movements, have declined to be named, analysts said, although rare earth prices bullish, but from the demand point of view, has not been a significant increase in the second half of market uncertainty, if the September, October do not wang so, Baotou Steel Rare Earth may have to "cut price" it.

Integrated enterprise will take time

In addition to the basic discontinued insured plans, "fall", but since the end of 2012, with 12 of Inner Mongolia Baotou Steel Rare-earth enterprise integration upstream substantive progress yet, is still in a kind of "delegated management" of the state.

May 4, 2011, Inner Mongolia introduced the "rare earth upstream enterprise integration phase work program", the local 35 companies will be mergers and acquisitions, compensation off, out of shutting down. By the end of 2012, Baotou Steel Rare Earth with one of the 12 companies signed restructuring framework agreement. In the end of 2013 have been rare forum, Baotou Steel Rare Earth, general manager Zhang said in an interview, said that 12 to be "incorporated" into the Group's business has not been substantive consolidation, is still in the early stages of integration, because " assessment do account ", etc.

"According to the Framework Agreement, the reorganization of the 12 companies and their shareholders must agree to the Baotou Rare Earth free transfer 51% stake in enterprises, consistent with the Baotou Rare Earth Development Plan and to achieve compliance with national environmental standards. Baotou Steel Rare Earth in human , technology, capital, rare earth resources, mandatory production plan targets and export quotas to give 12 corporate support. "Zhang in the rare earth forum said.

In addition, a number of insiders pointed out that the Baotou Rare Earth integration 12 companies real difficulty lies in the smelting and separation indicator is not enough. Be integrated with a home business, for example, concentrates before 1000 tons monthly subsistence, and now can only get five million tons Baotou Rare Earth Concentrate targets. Above estimates, 14 separate business capacity equivalent to a minimum of approximately 80,000 tons oxide calculation, but only 35,000 tons Baotou Steel Rare Earth Separation smelting targets.

Currently 12 companies are not included in the staffing and financial Baotou Steel Rare Earth unified management, namely in the "food" in the case financing. "Only smelting separation part, this is more of a delegated administration." The person said.

Exchange has not issued rules

In addition to the two "awkward" thing, but now, the concern is still rare exchanges to set up the past year, trading rules yet to be released.

In rare forum, Baotou Rare Earth Products Exchange Gu Ming, general manager, said in an interview with reporters, will dysprosium, terbium, europium and other rare earth as a variety of transactions, "the three is OK", but even when launched according to market conditions. These varieties have the characteristics of the larger price fluctuations, while lanthanum and cerium year price changes is small.

Data, from early June to late July dysprosium gains more fierce, from 1.1 million yuan / ton up to 2.5 million yuan / ton. Prior to this, the price of dysprosium oxide also rose fell.

Gu Ming said the goal is to exchange hedging direction towards the future may also be in the South and other places to set up storage base. For the future how to deal with the competitive aspects of Ganzhou, Gu Ming said the exchange is actually doing service work, "serving well, we will come to you like the deal."

According to information, participation in exchanges organized 12 shareholder business capacity accounting for the earth more than 80%. However, Ganzhou Rare Earth Group official website of the information, the company mastered more than 60% of the ionic rare earth quotas of production and supply of rare earth oxides, rare earth ranked first in the South. And Ganzhou Rare Earth Group is not a shareholder of Baotou Rare Earth Exchange. Moreover, in the last year, August 8 after the establishment of the Baotou Rare Earth Products Exchange, Jiangxi Province also established at the end of Ganzhou, Jiangxi Rare Metals Exchange.



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The future of light rare earth supply is likely to remain China's rare earth era

Baotou held the 5th China Baotou Rare Earth Industry Forum, Baotou Steel Rare Earth (Group) Hi-Tech Co., general manager Zhang describes the current situation of foreign rare earth resources, and the cost advantage of China's rare earth ore carried out a detailed analysis that , the future of light rare earth supply is likely to remain China's rare earth era.

China's rare earth mine production costs are much lower than foreign rare earth ore. With Bayan Obo iron mining, ore-situ leaching of heavy-ion technology is not comparable foreign rare earth mine. Almost all foreign rare earth project is rare for a single product project. Foreign mining methods in a project to re-open pit blasting style and ground-based exploitation.

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Magnetic rare earth alloy scrap prices continue to rebound

Rare bullish market participants, the market has a small amount of purchases. Waste relatively large magnetic fluctuations in market prices, and the prices continue to rebound reversal.

Dysprosium market price is more confusing, many manufacturers traders reflects badly on pricing, insiders reflect current dysprosium oxide with votes at least 2.15 million yuan / ton, the market situation inquiry to find goods increased. Dysprosium iron market, there are manufacturers do not offer 2 million yuan with votes / ton.

Gadolinium iron market today offer with fares at 215,000 yuan / ton, with no ticket price of 185,000 yuan / ton. Although metal manufacturers raised praseodymium neodymium, dysprosium iron and gadolinium iron prices, but the late rally was not able to go long and difficult to make a clear expectation.

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August 12, 2013 RE Price Quotes

August 12: Combating rare private mining operations will officially begin, upstream manufacturers still offer bullish downstream due to limited demand more cautious to accept the goods, the domestic rare earth prices high stalemate.

Lanthanum oxide mainstream manufacturers tax price 27,000-29,000 yuan / ton. Cerium oxide mainstream manufacturers tax price 28,000-29,000 yuan / ton.

Praseodymium oxide mainstream manufacturers tax price 500,000-510,000 yuan / ton. Neodymium oxide 330,000-340,000 yuan / ton.

Praseodymium neodymium mainstream manufacturers tax price 345,000-355,000 yuan / ton, praseodymium neodymium metal mainstream manufacturers tax price of 435,000-445,000 yuan / ton.

Europium oxide phosphor grade mainstream manufacturers tax price 4,700-4,900 yuan / kg. Terbium oxide phosphor grade mainstream manufacturers tax price 4,100-4,300 yuan / kg.

Dysprosium oxide mainstream manufacturers tax price 230-240 yuan / ton, dysprosium iron mainstream manufacturers tax price 230-240 yuan / ton.



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Japan relegated to the second largest Chinese rare earth export target country

"Japanese Economic News" news, in 2013 from January to May, China's rare earth exports to Japan was only 3,500 tons, lower than the volume of exports to the United States 4,000 tons. Prior to Japan has been China's largest rare earth export countries. Japanese media that this is a Japanese propaganda to promote energy conservation and diversification of import sources of rare earth policy outcomes.


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Rare heroin profits but no risk?

Rare earth industry to upgrade the second wave rectification actions. August 7, led by the Ministry, Ministry of Public Security and other eight ministries joint special rectification program of action of rare earth industry official release. From August 15 to November 15 to carry out special operations, with emphasis on investigating a number of private mining, poaching and other illegal typical cases. This is also the first time in two years, on the rare earth industry, the largest special rectification action.

Remediation work will be in the fight against illegal poaching and eliminate unhealthy competition, the formation of a large group of rare earth play an active role.

As an important strategic resource, rare earth in 2012 along with the global economic downturn, the industry has become one of the most injured, many rare corporate profits or even losses dropped significantly.

Last year, some rare earth products prices fell even reached 75%. Statistics show that in 2012 China rare earth ores, metals and compounds export volume was 1.63 million tons, down 3.5%, and far below the 2012 export quota of 31,000 tons. In addition to the economic downturn impact, rare earth export restricted net decline of domestic enterprises has become an important reason. China was once the world's leading supplier of rare earth, accounting for up to 95%. However, for the protection of scarce resources, since 2007, China began to implement mandatory rare earth production planning, and begin to reduce exports of rare earths. And 2012 is seen as the most stringent regulation of rare earth industry for one year. In this regard, many countries continue to broaden our pipeline of rare earth imports, attention gradually turned to Vietnam, Mongolia, Pakistan and other countries to reduce dependence on China.

Not long ago, the Ministry held a national work conference to further increase the mobilization of rare earth mining, smelting separation, environmental protection, import and export order rectification and strengthening the rare earth industry management, remediation activities are still mainly against rare earth mine private. Affected by the campaign, some sellers worry about rare earth supply, stockpile appear reluctant to sell, resulting in a rapid rebound in the short term prices.

Secondary market, turning the long earth plate up again scenery, rare earth prices have rocketed news sparked renewed enthusiasm to do more, the recent emergence of an underlying stock rally.

"RE prices rebounded inherent to a reasonable price range needs." China Rare Earth Industry Association Deputy Secretary-General Chen Zhanheng in said rare earth prices in the doldrums over the past year, many have been separated smelters unprofitable, or even a loss. Recent affected by various factors, of rare earth price spikes have some element of speculation. "RE prices always fluctuate large, easy to spike."

Recent price increases in the heavy rare earths, dysprosium oxide prices higher, the highest increase of 70% or more. Dysprosium metal in a larger amount of magnetic material in the wind power, hydropower and other fields versatile, the recent price rise may be related to the downstream industry demand for green energy, but the long term, the emergence of alternative technologies will likely make prices fall.

In the three-month renovation period, the Ministry will also timely introduction of relevant regulations, promote the formation of rare earth industry to further regulate long-term mechanism.

"Rare earth industry, the profits of heroin, but not the risk of heroin, various forces can play a role here, not white do not do." Rare earth traders pointed out that the time of low prices 20,000 yuan -3 yuan / ton, when the highest price 400,000 yuan / ton. Low cost, high profit. Rare is more addictive than drugs. This is a chain of interest, and tied to the officials from the people, from the mine to traders, from the local to the central rate of the broader social and market relations.

Profiteering result of repeated illegal mining and smuggling, but also makes the price spike. Combat and regulation that regulate the market, protect the environment. And the establishment of rare earth exchange will help stabilize the market and curb speculation speculation, the formation of a fair, open and impartial rare earth product prices, is conducive to long-term healthy development of rare earth industry.

Remediation industry will accelerate mergers and restructuring. After this round of regulation, does not exclude a large Rare Earth Group approved listing. May 2011, the State Council issued "on the promotion of sustained and healthy development of rare earth industry a number of opinions" made with 1-2 years' time, the basic formation of large-scale enterprises as the leading pattern of rare earth industry, the South ionic rare earth industry's top three bit conglomerate industrial concentration above 80%.



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MIIT five measures to promote the sustainable development of rare earth industry

August 8, by the People's Government of Inner Mongolia Autonomous Region, China Academy of Engineering, China Rare Earth Industry Association and the China Rare Earth Society co-sponsored the Fifth China Baotou Rare Earth Industry Forum held in Baotou, Inner Mongolia. From across the country more than 500 government officials, experts, scholars and entrepreneurs, the focus on the development of rare earth resources, production, scientific research, high-end industrial development of new materials and rare earth industry management as well as industrial restructuring and upgrading, etc. expand exchanges and discussions. For the rare earth industry, the existing deep-seated problems, the Ministry official said at the forum, the next step the Ministry will continue to take five measures to promote the healthy and sustainable development of rare earth industry.

Ministry Secretary Chen Yanhai raw materials at the forum said that, overall, China's rare earth industry management has achieved positive results, the initial realization of the establishment of a unified, standardized and efficient management system milestones, but the industry long-term accumulation of many deep-seated problems remain not been resolved.

China Rare Earth Industry Association Marong Zhang told reporters that the current domestic rare earth black chain is rampant illegal enterprises are defined as no clear criteria, resulting in combating difficult. Against black chain, you need to clear the main responsibility to establish long-term mechanism.

Some in the industry reflects the current resource tax per ton of rare earth mine in northern in 5000 to 14,000 yuan, the South mine in 6000 to 36,000 yuan, plus various taxes and resource taxes accounted for rare earth ore than 50% of the sales price, while the illegal mining of private dug product does not require taxes fees, has a great price advantage. 2012, Southern Rare Earth Separation ion ore smelting enterprises to obtain 70% of unknown origin, mainly private dug illegal mining of minerals. It is a little early to statistics, in 2012 the country illegally amount over 40,000 tons of rare earth minerals, metallurgical products more than 50,000 tons illegal export smuggling phenomenon more prominent in some places.

Chinese Academy of Engineering, China Rare Earth Industry Association, Gan Yong pointed out that China's rare earth permanent magnet materials common more than 80% of the total, high-quality specialty rare earth permanent magnet materials account for only about 10%, and domestic rare earth permanent magnet products for the domestic basic market and exported to international markets for less than 20%. He believes that the next step of rare earth industrial restructuring and upgrading should focus on developing high-end rare earth new materials.

To solve the above problems, Chen Yanhai said the next step will focus on the Ministry to take five measures to be addressed in a targeted manner: First, continue to carry out special operations to combat illegal. Ultra plans focus on combating smuggling and other acts of illegal enterprise immediately ordered to stop production for rectification, confiscate the illegal income. Key areas of government to implement the responsibility Rare units and persons responsible for serious implementation of production planning and controlling the total mined, while strengthening environmental verification. The second is to speed up the formation of large rare earth group. In accordance with the principle of market-oriented, actively carry out work of setting up and properly handle large groups and local business relationships. Third, to further promote the industrial structure adjustment and upgrading. To environmental verification, industry access entry point for the work, and gradually realize clean production, and strictly enforce the elimination of backward production technology and equipment and product manufacturing directories. Fourth is to strengthen environmental protection and access management. State environmental verification rare earth enterprises through the situation, get into the industry, an important criterion for admission. Fifth, to further improve laws and regulations, and strive to early introduction of "Rare Management Regulations" and other documents, a sound management system of rare earth industry. Chen Yanhai also revealed that the late administration also plans to increase resources tax tax reform, the formation mechanism of rare earth prices reasonable efforts to increase local revenue, and promote the ecological restoration of rare earth resources and environmental governance.

Another reporter has learned, China Rare Earth Industry Association, will be completed before the end of the year, "China's rare earth industry, long-term development plan," preparation.



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To be more storms hitting the earth to the sun

Eight ministries earth "hitting" action finally sounded the horn. This three-month nationwide special rectification action against rare earth industry and efforts are beyond the scope of previous "anti" operations, the industry directly to the "storm" to describe this action rapidly. The reporter believes that the rare earth industry regulation, require storm, need more sunlight.

In recent years, private dug earth Luancai repeated, not only causing serious environmental pollution, but also serious pressure on the informal enterprises living space. Since no environmental costs of illegal miners, ultra low sales a tremendous impact on the market. 2011 and 2012, respectively, rare earth prescriptive mining project was 9.38 million tons and 90,000 tons, but industry estimates, private mine annual production of about 200,000 tons. This leads to rare earth prices fell sharply, some of the rare earth industry, listed companies net profit decline in a row.

Throughout the remediation program, this special action not only checks the relevant indicators of the implementation of the local government, but also on production, sales, distribution inventory situation; only against illegal mining of rare earth behavior, illegal recycling waste products of rare earth enterprises are also included in the striking range . The chain of black interests is the focus of the fight, or even to investigate and deal with a number of typical.

Rare "hitting" was originally designed to regulate the market, however, has not yet begun to fight the tiger, cattle and sheep, but has been hurt. Campaign before the market there has been rumors that some companies stockpile reluctant sellers, rare earth prices soaring all the way since early June, prices of some rare earth metal oxides seven or eight percent within one month.

Rare earth prices spike, visible hand dozen lines. In recent years, the Chinese government will enhance the national strategy of rare earth resources, the implementation of mandatory production plans, but the rare earth enterprises assigned to the production plan targets small, relatively strong demand in the downstream of the case, a certain supply and demand gap. Lured by the huge profits, private rare earth ore repeated, forming a grasp on the prices go, and then relapse into illegal mining of chaos, lower prices of the cycle.

Reporters that the government should change the industry to rely on temporary measures crackdown campaign, introduced the industry standard management approach, the industry regulator together were pushing long-term mechanism to form a standard market order, in particular, should abandon the planned limited production means, so market supply and demand determine the price and yield.

Important to establish similar London Metal Exchange, the New York Mercantile Exchange this earth exchange, so a fair, just and open sun to decide the national strategy of rare earth resources in the price and yield. In this process, the government simply set up barriers to entry and to develop industry standards; strengthen law enforcement and severely punish illegal mining of rare earth resources; promote industry mergers and acquisitions, foster a number with a leading role in the industry, such as Rio Tinto, BHP Billiton Like the international influence of large mining enterprises. These companies rely on their own operational efficiency and consciously regulate rare earth production, rather than performing an index yields, then quoted prices better reflect the effective demand. Thus, rare earth pricing still lies in those hands of domestic enterprises, but also conducive to quell international disputes.



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