In April, China's rare earth integration plan was initially set to involve five leading enterprises, including Baotou Steel Rare Earth, Guangyu Nonferrous, Chinalco Group, Minmetals Group, and Zhangzhou Rare Earth Group. Following this, the integration of local rare earth companies with these five key players became a central focus in further consolidating the industry. The official announcement of this plan is expected to be made around August this year. Compared to earlier market expectations of seven major companies, Xiamen Tungsten and China National Color Co., Ltd. were not included in the final list.
Industry insiders believe that the challenges ahead in the integration process remain significant. Merging local resources with central state-owned enterprises continues to be a major hurdle.
**Finalizing Five Leading Companies**
As local rare earth resource integration progresses, the overall industry consolidation has started to take shape. Among the five enterprises identified as key players in China’s rare earth integration initiative, Baotou Steel Rare Earth, Guangyu Nonferrous Metal, and Ganzhou Rare Earth Group are local leaders, while Chinalco Group and Minmetals Group represent central enterprises.
Although companies like Xiamen Tungsten, China National Color, and Jiangxi Copper are powerful players in the sector, they have not been included in the official list of leading integrated enterprises. According to industry experts, the likelihood of these firms being integrated into the main group remains relatively low at this stage.
On May 10, 2010, China issued a series of "Opinions on Promoting the Sustainable and Healthy Development of the Rare Earth Industry," which called for a rare earth industry structure dominated by large enterprises. It also aimed to achieve an industrial concentration of over 80% among the top three enterprise groups in the southern ion-type rare earth industry.
Baotou and Zhangzhou are the primary production areas and industrial hubs for rare earths in northern and southern China, respectively. Their combined output accounts for two-thirds of the national rare earth industry value. In the north, a rare earth industrial cluster centered around Baotou Steel Rare Earth has already taken shape. In contrast, the southern ion-type rare earth industry, which holds higher strategic importance, lacks a dominant core enterprise, resulting in a more chaotic business environment.
On March 30 this year, Zhangzhou Rare Earth Group Co., Ltd. was officially established, marking the formal formation of the core industrial group in China’s southern ion-type rare earth region. “There is a rare earth in Baotou in the north and a rare earth in Zhangzhou in the south,†symbolizing the formal establishment of a balanced rare earth industry structure between the north and south.
**Integration Still Faces Challenges**
A representative from the Ministry of Industry and Information Technology stated that considering the nature of mineral resources, starting with regional integration and then forming a national rare earth group would help achieve full coverage of the rare earth industry chain. This approach supports the strategic goals of protecting natural resources and promoting sustainable industrial development.
Since last year, various regions have begun integrating their rare earth resources. Provinces such as Jiangsu, Hunan, Yunnan, Guangdong, and Sichuan have established rare earth industry groups to complete the internal resource consolidation within their respective provinces.
At the second meeting of the First Member and Council of the China Rare Earth Industry Association this month, Su Bo, vice director of the Ministry of Industry and Information Technology, emphasized that the main goal for this year’s rare earth efforts is to accelerate the formation of large-scale rare earth enterprise groups. This statement was interpreted by the market as a sign that the rare earth industry integration will move beyond the local level and achieve broader industry-wide consolidation.
“A lot of difficulties still exist in integrating central enterprises with local rare earth companies,†said an official from the Hunan Economic and Information Committee in an interview with the China Securities Journal. “However, in the next phase, local governments will explore ways to cooperate with central enterprises.â€
It is reported that Baotou Steel Group is leading the effort to unite the Gansu Rare Earth Group Co., Ltd., and absorb key enterprises from Sichuan and Shandong to form the North China Rare Earth Group.
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