China sets up new state-owned rare earth group following merger (updated)

China Rare Earth Holdings

23/12/2021 02:42

* New conglomerate aims to be a top-tier player - state
media
    * SASAC to hold 31.2% of shares of new entity
    * State-owned rare earth companies cut from six to four
    * New entity to be China's second-largest producer - analyst

 (Adds state regulator statement, details; paragraphs 2, 4-7)
    BEIJING, Dec 23 (Reuters) - China has set up a new national
rare earths company, China Rare Earth Group Co, that will
operate under the state asset regulator following a merger of
three rare earth producing entities in the world's largest
producer of the minerals. 
    China's State Assets Supervision and Administration
Commission (SASAC) announced the company's establishment but
gave few details.
    State media CCTV reported that the new conglomerate aimed to
become a top-tier player in the exploration and trade of rare
earths that are used in consumer electronics and military
equipment. 
    SASAC would hold 31.2% of shares of the new entity, while
China Minmetals Rare Earth Co Ltd  000831.SZ , Chinalco Rare
Earth and Metals Co Ltd, and Ganzhou Rare Earth Group Co Ltd
would each hold 20.3%, CCTV reported.   
    Moves to consolidate China's "Big Six" state-run rare earth
companies have been seen as China's way of boosting its
influence over pricing, as the country is the world's biggest
producer of rare earths and controls 85%-90% of the rare earths
processing sector.
    Following the merger, China will have four state-run rare
earth firms. Based on China's rare earths output quotas for the
first half of 2021, CRU Group estimates the new entity will be
the country's second-largest producer of overall rare earths
output, and account for around 70% of China's heavy rare earths
output.  urn:newsml:reuters.com:*:nL1N2QW0TV
    China's dominance of the sector has caused an uneasy
reliance on Chinese supply for countries like the United States
https://www.reuters.com/business/aerospace-defense/us-probe-some-imported-magnets-part-supply-chain-review-2021-09-24
 and Britain https://www.reuters.com/world/uk/exclusive-uk-gears-up-produce-rare-earth-magnets-cut-reliance-china-2021-11-04,
 which have acknowledged the national security risks this
entails.  
    And amid tensions between China and the United States,
automakers in the West are also trying to reduce their reliance
on rare earths, and have been looking to replace the minerals or
limit their use.  urn:newsml:reuters.com:*:nL5N2OK48R
    China Minmetals said late on Wednesday that it would merge
with Chinalco and China Southern Rare Earth Group Co, which
Ganzhou Rare Earth is the parent company of, into a new entity
after flagging in September that this restructuring was
underway.  urn:newsml:reuters.com:*:nL1N2T70MO  urn:newsml:reuters.com:*:nL1N2QP1MO
    Shares of China Minmetals rose as much as 8.5% on Thursday
morning, its biggest daily percentage gain since Dec. 2, and
were last up 3%.  urn:newsml:reuters.com:*:nL1N2T8052
    Ganzhou, a city in southern China's Jiangxi province, is
home to Minmetals Rare Earth and Ganzhou Rare Earth, the latter
directly owned by the city government. Ganzhou is a hub for
heavy rare earth smelting and separation.      
    

 (Reporting by Emily Chow and Hallie Gu; Editing by Stephen
Coates)
 ((emily.chow@thomsonreuters.com; +862120830020; Reuters
Messaging: emily.chow.thomsonreuters.com@reuters.net))