China to create rare earth giant by joining three state-owned companies
CHONGQING, China – China will restructure three rare earth producers to create a state-owned enterprise with an almost 70% share of the national production quota for metals essential for the manufacture of high-tech products.
The move is aimed at accelerating the development of resources and processing technologies, as well as strengthening Beijing’s control over the mining sector in anticipation of protracted trade tensions with Washington.
By restructuring the country’s main rare earth companies, the government is seeking to extend control of production to the entire supply chain, including exports. The move comes as the United States seeks to create an alternative supply chain for rare earths, joining forces with Australia.
China Minmetals Corporation (CMC), a major state-owned resource company, China Aluminum Corporation, a large state-owned non-ferrous metal company, and the government of Ganzhou City in Jiangxi Province, a region known for its rare earth deposits, “Are planning a strategic reorganization” of their respective rare earth subsidiaries, according to CMC’s listed subsidiary.
Peng Huagang, secretary general of the Commission for the Supervision and Administration of State-Owned Assets, which oversees state-owned enterprises, said at a press conference this week that the government “will promote the restructuring of rare earths for create a world-class business. “
If the definition of “restructuring” is not clear, if it was a total merger, the new company’s share in the production quota of medium and heavy rare earths in China will be almost 70%. , and that of rare earths as a whole, including light rare earths, will be almost 40%.
Medium and heavy rare earths, such as dysprosium and terbium, are considered essential for the production of high performance magnets, which are used in motors and other components of electric vehicles, and would also be used in drones and missiles. American military.
Chinese President Xi Jinping has long viewed metals as a vital part of China’s economy, saying in 2019 that “rare earths are an important strategic resource.” A rare earth bill was released in January and is under discussion in the National People’s Congress, the Chinese parliament.
China accounts for 60% of the world production of rare earths according to the US Geological Survey. The main export destinations are Japan (49% in value) followed by the United States (15%), according to Chinese media.
For the Xi leadership, rare earths can also be used as a diplomatic asset. When China protested against the nationalization of the Senkaku Islands by Japan in 2010, Beijing blocked rare earth exports in order to put pressure on the Japanese side. The new initiative to restructure the rare earths industry could therefore affect the supply of rare earths to Japan and the United States, analysts warn.
The demand for rare earths is increasing due to the global spread of electric vehicles. Due to political instability in Myanmar, another large producer of rare earths, the price of dysprosium and terbium in China has increased by around 60% and 90%, respectively, compared to a year ago. At the end of September, the Chinese government increased the rare earth production quota by 20% for 2021 compared to the previous year.