Major rare earth conglomerate to be established

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Last updated at: (Beijing Time) Friday, February 20, 2004

Major rare earth conglomerate to be established

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A long-awaited conglomerate involving rare earth metal producers, based on consolidation between a number of companies dealing in those metals in South China, will be officially established next month.

The conglomerate, to be called China Southern Rare Earth (Group), will include 13 companies led by the Aluminium Corporation of China (Chinalco) - the nation's biggest aluminium maker - and the China National Metals and Minerals Import and Export Corp (Minmetal), Chinalco said in a statement.

The new conglomerate will control 90 per cent of the rare earth resources in South China.

Chinalco and Minmetal have committed to inject cash into the new conglomerate as two strategic investors, according to the Chinalco statement.

Further, Chinalco President Guo Shengkun has been selected head of the preparatory committee of the establishment of the China Southern Rare Earth (Group) Corp.

No financial details have been released concerning the new conglomerate. But sources from Chinalco said that both the aluminium maker and Minmetal will have a 30 percent stake in the southern rare earth group.

"We aim to integrate with the international market and build China South Rare Earth (Group) Corp into an internationally competitive company, according to requirements of the modern enterprise system," the company said.

The move is part of a government plan to restructure the nation's rare earth metals industry.

Rare earth produces strategically important metals for China.

China owns 22 million tons of rare earth reserves, some 30 percent of the world's total.

In 2002, China produced 75,000 tons of rare earth metals, accounting for 85 percent of the world's total output. Half of its rare earth produced metals were exported.

"China's fragmented rare earth industry needs such consolidation, in order to prevent redundant low-level exploration," said Hong Feng, a senior rare earth analyst based in Beijing.

There are more than 130 rare earth companies in China, according to government statistics.

Their excessive exploration and fighting over exports have generated huge losses of China's rare earth resources in recent years.

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