Ganzhou Rare Earth Group entered operation on March 30, 2013, marking an important step forward in Ganzhou’s intensive development of rare earth industry.

Ganzhou claims title as China’s biggest medium and heavy rare earth production and processing region.

Ganzhou has been making great efforts in integration of rare earth industry in its jurisdiction since December 2010. All rare earth mines in the city were closed for readjustment in May 2011 and construction of standard mines is now underway.   .

Ma Rongzhang, Secretary General of the Association of Chin Rare Earth Industry, said Ganzhou Rare Earth Group will step up M&As and improve industry concentration so as to develop itself into a large south China rare earth group.  

Ganzhou Rare Earth Group is a large state-owned enterprise in Ganzhou as well as a leading south China rare earth enterprise. As the sole owner of mining rights to rare earth in Ganzhou, the company integrates the entire rare earth industry chain, from mining through smelting, separating, processing, trade, and R&D.

                   

Integration of light rare earth industry in north China has made great strides. At the end of last year, Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-tech (hereinafter referred to as Baotou Steel Rare-Earth) signed the Framework Agreement on Integration and Reorganization of Rare Earth Upstream Producers with shareholders of twelve rare earth upstream producers in Inner Mongolia. Each of these twelve enterprises has agreed to transfer 51% stakes to Baotou Steel Rare-Earth for free.

Integration of rare earth industry in south China proceeds more slowly compared with north China. That being said, some central state-owned rare earth enterprises and those in key provinces and regions have stepped up M&As. For example, regional groups have been established in Jiangxi and Fujian, improving industry concentration in these provinces. Zhu Hongren, press spokesman of the Ministry of Industry & Information Technology said corresponding departments will give the green light to the establishment of large rare earth groups as appropriate.

Mr. Ma has urged Chinese rare earth enterprises to closely track rare earth development overseas and lay out corresponding schemes. Many foreign companies such as Molycorp and Lynas Corp have been building or expanding rare earth dressing and smelting projects in recent years. He also proposed to relax control on light rare earth exports while protecting medium and heavy rare earth.


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Peak Resources will soon release a revised JORC Resource for its Ngualla Rare Earth Project in Tanzania and has been granted a trading halt.

Ngualla currently boasts the fifth largest rare earth resource, and the highest grade of the seven largest deposits outside of China.

At present, the project hosts a resource of 170 million tonnes at 2.24% REO. The total resource includes a higher grade, near surface zone of 40 million tonnes at 4.07% REO for 1.6 million tonnes of contained REO.

The halt will last until the earlier of an announcement being made to the market, or the opening of trade on Thursday 4th April 2013.


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Baotou Steel Rare-Earth (Group) Hi-Tech, the country's largest rare earth producer, announced in its financial results that it saw a sharp drop in its net profit and revenue in 2012 due to withering demand and a slowing economy.

The company's net profit declined 56 percent to 1.51 billion yuan ($240 million) last year compared with 2011.

Its revenue fell 19 percent to 9.24 billion yuan as a result of continuous low demand in the rare earth market and a drop in rare earth prices .

From raw material to functional products, the revenue has been down significantly, the company said.

The current price for primary rare earth products is 35 percent lower than in 2012. The company plans to reach revenue of 7.5 billion yuan in 2013.

Baotou Steel resumed production on Feb 23 after a four-month halt in production affected by the price slump.

Another major rare earth producer, China Minmetals Rare Earth Co Ltd, announced on March 26 its revenue was down 47 percent from 7.6 billion yuan in 2011 and its net profit has dropped 74 percent from 1.02 billion yuan in 2011.

Rare earths, which comprise 17 metallic elements, are used in many important technological products including missile systems and hybrid cars.

Export trade value has been on the decline as well. According to statistics from Baotou Customs, despite exports of rare earth increasing 3.3 percent to 3,021 metric tons in 2012, rare earth prices are down 76 percent to $26,000 per ton.


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According to the annual report of Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-tech (hereinafter referred to as Baotou Steel Rare-Earth), the company’s profits declined nearly 57% YoY to RMB 1.51 billion in 2012, due largely to shrinking demand from slowing economy. The company lowered its sales target for this year by as much as nearly 20% out of growing pessimism over outlook for rare earth.     

Baotou Steel Rare-Earth reported RMB 9.24 billion in operating revenues last year, down 19.83%, and RMB 1.51 billion in net profits, also down 56.58%. Earnings per share were a mere RMB 0.624, markedly down from RMB 1.436 in 2011.  

The company explained that rare earth market was depressing throughout 2012, accompanied by falling prices. Sales of rare earth metals slumped due to poor orders from magnetic material producers, resulting in a 47.18% decline in the company’s operating revenues in this segment.  

The rare earth market has shown no signs of turning around. Prices for rare earth products slid 35% YoY in early 2013. Plagued by sluggish rare earth markets, Baotou Steel Rare-Earth, a leading rare earth producer, has set itself a target of achieving RMB 7.5 billion in sales revenues in 2013, down 18.85% from last year’s RMB 9.24 billon.  

The company says it will step up integration and restructuring of rare earth industry in Inner Mongolia. Besides, it will vigorously push ahead with alliance of producers in Gansu, Sichuan and Shandong to pave way for its establishment of China North Rare Earth Group.


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China's rare earth exports soared in February. According to China Customs, China exported 1,106 mt of rare earth in February, up 289.12% YoY. Market players believe that does not mean overseas demand improves.

After rare earth prices climbed to a high in August 2011, China's rare earth exports had been falling for several consecutive months. China's rare earth exports in 2012 were below 2011 levels, and nearly half of export quotas was vacant. Rare earth exports account for 1/3 of domestic rare earth output, and shrinking overseas demand will negatively affect the rare earth market. But rare earth exports tripled in February after rare earth prices rose to early 2011 levels. Is that because overseas demand improves?

But Gao Yuxin, a rare earth analyst from Ruidow, reported demand for rare earth was still sluggish, and transactions were muted.

                  

Shanghai Heli Rare Earth Material Company engages in rare earth import and export business. According to Manager Yuan, the export data does not mean real demand grows, and rare earth international trade is still sluggish. Most China's rare earth exports were made to Japan. According to a professor from Hirosaki University, Japan reduced rare earth imports two years ago due to high prices, and produced with raw material inventories. There were also large amounts of rare earth smuggled into Japan, with prices very low, which is excluded in regular statistics.

Domestic market was also sluggish. Some rare earth users now began to purchase rare earth but modestly with existing prices.

Demand for rare earth was sluggish due mainly to China's weak rare earth downstream user industries. Half of rare earth is used in new materials, while only Zhongke Sanhuan, Advanced Technology & Materials Company and Ningbo Yunsheng produce rare earth permanent magnetic product. Many China's rare earth permanent magnetic product producers posted losses in 2012. Once overseas market weakened, rare earth industry will be impacted.

Demand for rare earth is now extremely weak. One rare earth trader said they only hope rare earth prices do not fall further. Neodymium oxide prices have fallen from RMB 1.4 million/mt in August 2011, to RMB 400,000/mt in March.


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The Ministry of Land and Resources (MLR) held a press conference titled “Reserves of Petroleum, Natural Gas and Major Solid Mineral Resources in China during 2012” on March 27. According to the press conference, standards on mining recovery rate, mining dilution rate and dressing recovery rate in mineral resources of strategic importance including iron ore, copper ore, lead ore, zinc ore, rare earth and sylvite will be formulated this year.

According to Xu Dachun, Deputy Head of Mineral Resources Reserve Department of MLR, its department will establish databases on comprehensive utilization of mineral resources across China, complete surveys and assessment of mining recovery rate, mining dilution rate and dressing recovery rate of key mineral resources, and release reports on comprehensive utilization of mineral resources on a yearly basis. China’s first resource saving and comprehensive utilization evaluation indicator system will be released, which will be used as standards for evaluation of resource saving.  

China will vigorously popularize advanced and applicable technology so as to facilitate exploitation of mines.

Mr. Xu added that its department will strictly collect mineral resource compensation fees based on mining recovery rate so as to promote rational exploitation of mineral resources.


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The rare earth case against China launched by the WTO will be decided by the end of the year. Market players believe China will have little chance to win the case, and predict China's management system to the rare earth industry will change, with new rare earth regulations expected to be released.

According to market analyst Chen Jiazuo, China's rare earth industry should put emphasis on local utilization of rare earth and rare earth functional material. He said, rare earth market players generally lack confidence for China to win the WTO rare earth case, and that will cause China to change its management system. Existing management measures including quotas, taxes and qualifications will likely be eliminated, and new regulations will be released.
　　
China will likely accelerate construction of rare earth groups, so that China's rare earth business can run in a way of marketization.


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In February 2013, China's rare earth exports 1106 tons, greatly increased 289.12% on last year, while in the same time, the rare earth prices have seen a sharp fell comparably. Some experts believe that the significant increase in the exports of rare earth is owing to the low base of last year same period. It is showed from the statistics that rare earth prices in February amounts to $22,650/ton, down 11.32% with last month of $25,540/ton .

Generally speaking, the rare earth companies have filled in its inventory in advance, in order to better prepare its peak selling season in March. It has been informed that, Baotou Steel Rare Earth, which has discontinued its production for four consecutive months, has announced its resume of production, while at the same time, the company has began to use the materials form domestic companies in North China.

GF Securities analyst Guoxian Ju said, With the peak production season in March and April, the rare earth concentrate prices has been stable for almost 2 months. However, the slightly decrease in the price of midstream smelting products has showed the demand is still under depression.


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It is a good period for the depressing rare earth industry to conduct industrial upgrading officially. Ministry of Finance, Ministry of Industry and Information Technology have jointly issued the "Special Funds Management for Rare Earth Industry Upgrade", which will support "R&D of Technology and Standards", "R&D of Technical Application and Industrialization", "Development of Technical Platform". The measures have incorporated a number of subsidy financing and capital injection to support the rare earth technology development and industrialization.

The special funds will be utilized for the following five perspectives: Rare Earth Resource Extraction Supervision; Rare Earth Mining, Smelting Environmental Technological Innovation; R&D of Rare Earth Key Technologies and Standards; Technology Development and Industrialization of High-end Applications of Rare Earth; Construction of Public Technical Services Platform.


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According to the website of the Environmental Protection Office, 80 rare earth producers in China meet environmental protection requirements, and passed inspections by the Environmental Protection Office. 5 of them are located in Baotou.

These five enterprises include Baotou Xinyuan Rare Earth Hi-Tech and New Material Company, Baotou Luodiya Rare Earth Company, Baotou Tianjiao Seimi Polishing Powder Company, Baotou Rewin Rare Earth Metal Materials Company and Baotou Santoku Battery Company.

After the inspections, environmental protection equipment standard and management ability of enterprises will improve.


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