Korean companies take 60% stake in Chinese rare-earth company

14:42, June 12, 2010      

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Korea Resources Corp. announced yesterday it has acquired a 60 percent share in China's Yixing Yongxin Rare-Earth Trade Co., Ltd (Yongxin85) at a cost of nearly 60 million yuan together with another Korean steel company POSCO.

Korea Resources said they hold 29 percent shares of the newly-established company POSCO Korea Yongxin Rare Earth Metal Co. while the Chinese partner Yongxin85 and the POSCO hold 40 percent and 31 percent shares, respectively.

Yongxin Rare-Earth Trade Co., Ltd (Yongxin85) is a trading company selling various types of rare-earth products found in March 2003.

It is believed Korean companies aim to obtain rare-earth resources from China by equity participation in Chinese companies.

China has the most rare-earth reserves in the world and is also the largest rare-earth manufacturing and exports country. Data from the Ministry of Industry and Information Technology shows the output of rare-earth products and smelt separation products in China in 2008 was 125,000 tons and 135,000 tons, respectively, of which China only consumed 70,000 tons and the majority was used up by other countries.

To protect the domestic resources and environment, China commenced tightening rare-earth export volume substantially in recent years.

However, Yongxin85 has no rights to export rare earth according to the rare-earth export quota issued by China's Ministry of Commerce.

Analysts said companies that have no rare-earth export rights are able to export rare earth from China by making use of policy loopholes via equity participation or other ways to cooperate with domestic companies that have the export quota.

By People's Daily Online

(Editor:祁澍文)

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