China to establish new rare-earth mammoth through merger
Published: Dec 05, 2021 10:45 PM
A worker unloads rare earths along the Yangtze River's banks in Southwest China's Chongqing Municipality on May 9. Photo: IC

A worker unloads rare earths along the Yangtze River's banks in Southwest China's Chongqing Municipality on May 9. Photo: IC

China is set to establish a global rare-earth giant based on the merger of rare-earth assets from several state-owned enterprises, in a move that analysts say will effectively enhance the development and concentration of the domestic rare-earth industry.  

"There are certain discussions on the merger, and the plan is beginning to take shape," a manager at a state-owned rare-earth enterprise based in Ganzhou, East China's Jiangxi Province, who spoke on the condition of anonymity, told the Global Times on Sunday. 

The manager said that the new mammoth company is expected to be officially set up this month.

Several media outlets, including the Wall Street Journal, have also reported on the plan to create the new rare-earth group. 

The establishment of the company will further strengthen China's advantages in the rare-earth industry, Wang Guoqing, research director at the Beijing Lange Steel Information Research Center, told the Global Times on Sunday. 

With the concentration of the industry being gradually improved, China will have enhanced competitiveness and stronger pricing power on the international market, according to Wang, adding that China's dominance of rare earths will be further consolidated. 

Wang noted that some rare-earth minerals in the country are still scattered, resulting prices being pushed down to a relatively low level. "Some rare-earth minerals have been traded for 'cabbage prices'," said Wang.

Analysts pointed out that the prices of these minerals will be raised to a healthy level under proper guidance with the new firm taking shape. 

"The move partly aims to cement China's edge across the rare-earth upstream and downstream chains. It is expected that the new company will enforce stricter rules on the production quantity as well as the export volume of rare earths, which may also drive up prices," the manager said.

The creation of the company will boost the sound and sustainable development of the domestic industry and supply chains, while avoiding the blind outflow of the country's rare-earth resources, according to Wang. 

Wang emphasized that the merger will promote the sharing of advanced technologies among the companies, which is beneficial for these domestic firms to maximize the current resources and avoid the waste of some minerals that could not be processed previously due to the lack of mature technologies. 

As for the potential operational model of the company, Wang said that the new company may need some time to explore its strategies. 

"Since the new firm will be operated under a group system on the basis of the merger, it will soon stabilize the domestic rare-earth market, while further strengthening environmental protection and placing even greater focus on the safety of processing technology," said Wang.