July 19, 2019

Seven major groups rush to the South China rare earth integration problem

Abstract After more than two years of integration, the northern region of China's rare earth industry with Baotou Steel's rare earth as the main body has become clear, and the southern pattern is still chaotic. According to the Economic Observer, the Ministry of Industry and Information Technology (the Ministry of Industry and Information Technology) is still discussing the integration of rare earths in the South. Close to the Ministry of Industry and Information Technology...
After more than two years of integration, the northern region of China's rare earth industry with Baotou Steel's rare earth as the main body has become clear, and the southern pattern is still chaotic.

According to the Economic Observer, the Ministry of Industry and Information Technology (the Ministry of Industry and Information Technology) is still discussing the integration of rare earths in the South. People close to the Ministry of Industry and Information Technology revealed that the goal of the Ministry of Industry and Information Technology is to integrate the current four or five competitors of the South China rare earth into one or two. The person said that “it is very difficult. It is not like the single competition of rare earths in the north. The integration of rare earths in the South involves not only the game between central enterprises but also local state-owned enterprises, but also the game between central and local governments.”

In the pattern of rare earths in the south, the seven major forces dominated by China Minmetals, Chinalco Group, China National Colors, Zhangzhou Rare Earth Group, Guangdong Rare Earth Industry Group, Fujian Rare Earth Group and Hunan Rare Earth Group are playing games. The biggest difficulty in integration.

Prototype

Recently, Su Bo, Vice Minister of the Ministry of Industry and Information Technology, attended the first member and council meeting of the China Rare Earth Industry Association, saying that one of the key tasks of the rare earth industry in 2013 was to accelerate the formation of large-scale rare earth enterprise groups.

At the meeting, Su Bo highlighted the achievements of mergers and acquisitions by key rare earth enterprises such as China Minmetals, Chinalco, Baotou Steel Rare Earth, Cangzhou Rare Earth Group and Guangdong Rare Earth Industry Group.

This has been interpreted by the outside world as an integrated solution for China's rare earth industry, which will form five major groups. However, people close to the Ministry of Industry and Information Technology said that the rare earth integration program can now basically determine only the northern rare earth pattern, that is, to build a large rare earth group based on Baotou Steel's rare earth. “After the integration of the first two years, the southern rare earth has basically been determined, that is, it will be decided between several large central enterprises and local state-owned enterprises. The next step is to carry out cross-regional integration.” .

The large integration of China's rare earth industry began in 2011. It was proposed by the State Council that the State Council issued a number of opinions on promoting the sustainable and healthy development of the rare earth industry. It took 1 to 2 years to form a rare earth industry pattern dominated by large enterprises, and the top three enterprise groups in the southern ion-type rare earth industry. Industry concentration reached 80% or more.

During the "two sessions" last year, Miao Wei, Minister of the Ministry of Industry and Information Technology, proposed that after the successful completion of the components of the rare earth production enterprises, only two or three large-scale rare earth enterprises will be retained.

In fact, since the promulgation of the “Integration and Elimination of Rare Earth Upstream Enterprises in Inner Mongolia Autonomous Region” on May 4, 2011, Baotou Steel Rare Earth has opened up the integration of the rare earth industry in Inner Mongolia.

On December 27, 2012, Baotou Steel Rare and 12 upstream rare earth enterprises and shareholders in Inner Mongolia signed the “Rare Earth Upstream Enterprise Integration and Restructuring Framework Agreement”. These companies agreed to transfer 51% of the company's equity to Baotou Steel Rare Earth without charge.

The reporter learned that at present Baotou Steel Group is taking the lead in uniting Gansu Rare Earth Group Co., Ltd., integrating and absorbing the backbone enterprises in Sichuan and Shandong to jointly form the North China Rare Earth Group.

Correspondingly, the pattern of the Southern Rare Earth Group is relatively complicated. "According to the requirements of the Ministry of Industry and Information Technology, the rare earths in the South will be integrated into one or two. Now there are at least seven powerful enterprises, including three central enterprises and four local state-owned enterprises. It is difficult to decide who will be the main body." Say.

At present, the southern rare earth forms the four regional industrial groups mainly composed of Jiangxi Quzhou Rare Earth Group, Guangdong Rare Earth Industry Group, Fujian Rare Earth (Group) Co., Ltd. and Hunan Rare Earth Group, as well as Minmetals Group, Chinalco Group, and China National Color Group. The pattern of joint participation of three central enterprises.

Integration problem

This pattern has made the further integration of rare earths in the South into a dilemma. An insider of Minmetals said that the strength of several major groups is not bad. The current situation is that everyone is wrestling and even vicious competition.

China's rare earths are classified into southern ion-type medium-heavy rare earth ore and northern light rare earth ore according to their quality. The former is mainly in Ganzhou, Jiangxi, Fujian Longan and other places; the latter is mainly in Baotou, Inner Mongolia and Liangshan, Sichuan.

In Zhangzhou City, Jiangxi Province alone, Chinalco, Minmetals, China Nonferrous Metals, Luzhou Rare Earth, Jiangxi Copper, and Guangzhao Nonferrous Metals were gathered. Ganzhou has 95% of China's medium and heavy rare earth production.

Last year, China's rare earth industry M&A transactions were active. The data shows that in 2012, the rare earth industry had 34 mergers and acquisitions transactions in the whole year, with a transaction amount of 3.78 billion yuan. Among them, 19 were aimed at developing new rare earth new materials and applied products, accounting for 56% of the total.

Experts from the above-mentioned rare earth industry association said that although the final integration plan has not been determined, in order to weigh the pros and cons, it is possible to choose a central enterprise and a local enterprise group as the main body.

Among the central enterprises, Minmetals Group controlled the two rare earth smelting and separating enterprises of Dingnan County Southern Rare Earth Company and Xunwu County Southern Rare Earth Company and Zhangzhou Huajing Rare Earth New Material Company through the holding of Jiang Tungsten. In addition, through the Minmetals rare earth directly controlled the two smelting and separating enterprises of Dingnan Dahua and Hongjin Rare Earth.

The insiders of the above Minmetals Group said that if the plan is finalized, Minmetals will likely become the dominant. "One is that Minmetals has the advantage of central enterprises, and the other is that Minmetals can open up the upstream and downstream links of the rare earth industry." The source said.

However, Chinalco and China's non-ferrous strength cannot be underestimated. In May 2012, Su Bo, deputy minister of the Ministry of Industry and Information Technology, said during the investigation of Chinalco that he hopes that Chinalco will play a leading role in the integration of rare earth resources.

"Compared with the other two central enterprises, Chinalco has been recognized by the Ministry of Industry and Information Technology officials," said the person close to the Ministry of Industry and Information Technology. Last year, Chinalco plans to spend 5.2 billion to develop Guangxi rare earth resources.

China National Colored Co., Ltd., a listed company of China Nonferrous Metals Co., Ltd., invested 473 million yuan to build a rare earth separation project with an annual output of 7,000 tons, making China Southern Red Rare into China's largest rare earth separation enterprise.

As for the regional rare earth industry group, the Cangzhou Rare Earth Group is undoubtedly the most advantageous. The proven reserves of ionic rare earth resources in Ganzhou are about 470,000 tons, and the prospective reserves are about 9.4 million tons, accounting for about 40% of the national ionic rare earth mineral reserves.

In Cangzhou City, the only main business entity of local rare earth mineral resources is Cangzhou Rare Earth Mining Company under the State-owned Assets Supervision and Administration Commission of Cangzhou City. The company is affiliated with the Luzhou Rare Earth Group and holds 43 of the 45 rare earth mining licenses in Jiangxi Province.

Experts from the above-mentioned rare earth industry associations said that among several local regional enterprises, the Cangzhou Rare Earth Group is undoubtedly the strongest. However, due to its geographical limitations, it may be difficult to shoulder the heavy responsibility of integrating the entire southern rare earth.


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