Among the six rare earth groups in China that have planned to promote the integration and construction, three have finished their tasks on schedule at the beginning of 2016.
Source: Bing
The Capital Increase and Acquisition Agreement of the South China Rare Earth Group Co., Ltd was signed by South China Rare Earth Group, Ganzhou Rare Earth Group, Jiangtong Group and Jiangwu Group on 29th December, 2015, marked success of the integration and construction of South China Rare Earth Group, which is the first state-owned enterprise in Jiangxi Province.
Xiamen Tungsten Co.,Ltd. has also finished the integration of the rare earth mines in Fujian Province (except the mines of the China Minmetals Corporation), elimination of the outdated smelting and separation capacity, the comprehensive development and utilization of the resources, the company said in an announcement released on the same day.
According to the announcement of China Northern Rare Earth released on 31st December, the company has completed the integration and reorganization of the eight rare earth smelting and separation enterprises of the Inner Mongolia and Gansu Rare Earth New Materials Co.,Ltd. , and formed the China Northern Rare Earth (Group) High-Tech Co.,Ltd. on the basis of the former Inner Mogolia Rare-Earth Hi-Tech.
The State Council proposed in 2011 that the country should establish the rare earth industry structure oriented by the large-scale enterprises in one to two years; Later, on December 2013, the Chinese government put forward the plan for constructing six large-scale rare earth groups in China, including Northern Rare Earth, Southern Rare Earth, China Aluminum Group, China Minmetals Corporation, Guangdong Rare Earth and Xiamen Tungsten.
According to the document introduced by Ministry of Industry and Information Technology (MIIT), the six groups above will integrate all the rare earth mines and smelting & separation enterprises to achieve the substantial reorganization tied by the capitals. So far, among the six groups, there are three—China Aluminum Group, China Minmetals Corporation and Guangdong Rare Earth—have yet to complete the integration.
China Aluminum Group is stepping up on integrating the resources in Sichuan Province. Shenghe Resources, the branch company of the group, announced on 31st December 2015 that the company, together with the China Aluminum Group Sichuan Rare Earth, has invested RMB96 million in total and then gets 51% stock equity of the Mianli Rare Earth Minerals Company through the way of capital increase.
The prime assets of the Mianli Rare Earth Minerals located in the Yangfanggou Rare Earth Mining and Processing Plant in Mianning county, with the designed using resource volume of the mine of 477,2.5 thousand tonnes, the mining scale of 25 thousand tonnes/year, and the processing capability of 200 thousand/year.
According to Zhang Wei, Analyst of the SCI, China Aluminum Group has nearly completed its integration; and Guangdong Rare Earth is also expected to finish the work in the near future since its integration has mainly been carried out in the regions of Guangdong Province.
The six rare earth groups will carry out the quota distribution, green production, and the product up-gradation deep processing after the integrating. Although the finish of integration would produce a positive effect to the overall rare earth market, the practical result depends on the subsequent supervision and regulation.
The promotion of Oligarch pattern of the Six Groups across China by the government was mean to reform the disordered situation of the rare earth industry and to fight against the “dark rare earth.”
The so-called “dark rare earth” refers to the rare earth that has been exploited by the mines not approved by the government. It has expected that more and more “dark rare earth” appears in China’s market; while the actual inventory is yet to know because of the extremely low transparency of its production.
Dudley J Kingsnorth, Executive director of the Australia Industrial Minerals Company, said in the Argus Rare Earth International Convention that the deliverability of the “dark rare earth” from China is expected to reach to 40 thousand to 45 thousand tonnes in 2015, while the deliverability of legal rare earth is 105 thousand tonnes.
The “dark rare earth” has been exploited recklessly across China, thus there’s little can be done to effectively control of the turnover of the rare earth, to improve the situation of the excess production capacity or to stabilize the keep-falling price for the rare earth.
The price of the most of the rare earth products rebounded in the beginning of the 2015 due to the replenishing of the downstream stocks before the Spring Festival, but decreased all the way from the end of the first quarter.
The price of the europium oxide was RMB580/kg to RMB630/kg in mainstream market, decreased by 64.85% year-on-year; meanwhile the price of the oxides dropped by more than 20%, the dysprosia and the terbium declined by nearly 30%. The rare earth price reversed to the level of 2010, some of which even far below the price of 2010.
To address the difficult situation, the six rare earth groups began to take the measure of the Joint Output Restriction to support value. China Rare Earth Company, a subsidiary of China Aluminum Group, decreased its production by 5%-10% of the total output and the other five groups among the six all reduced by 10% of the total.
According to the data published by the MIIT, there were 52.5 thousand tonnes of the minerals products and 50.05 thousand tonnes of the smelting and separation products among the total output of the first batch of the rare earth in China. The six groups were been approved to produce 49,712 tonnes of minerals products and 46,690 smelting and separation products. However, the smelting and separation products would reduce at least by 4,600 tonnes if the Joint Output Restriction with the deduction rate of 10%.
Stimulated by the Joint Output Restriction of the six groups, the price of the rare earth products like the praseodymium, neodymium, dysprosium, terbium and gadolinium rebounded, but shortly declined again.
In fact, it is in doubt that whether the six groups actually reduced production. “It is possible that the companies hasn’t reduced their outputs but held a quantity of goods in stock, so the reduced quantity actually equals to the added inventory yet been put on the market,” said Zhang Wei, the companies won’t waste their capacity in vain as gap produced by the reduction would be filled by the “dark rare earth”.
Although the “dark rare earth” is inferior to the quality goods in terms of the purity due to the lack of the advanced equipments, it’s quite appealing to the buyers in the market as the price of which would usually 20% to 30% lower, according to Zhang Wei.
From 2014 to October 2015, China government has carried out the special actions for several times to fight against the illegal activities in terms of the exploiting, production, circulating and the exporting of the rare earth. The article published on 5th January 2015 on the official website of China Rare Earths Industry Association commented that although the actions have made some achievement in curbing the illegally exploiting of the rare earth, the result of the fighting against the “dark rare earth”, with very little substantial progress, was not very satisfactory as various interest groups have been involved in the issue.
The rare earth industry hangs on the integration of the six groups; nevertheless, the integration isn’t the cure-all medicine for of the issue of “dark rare earth”.
"It depends on the implementation strength of the government and the self-discipline of the industry.” According to Zhang Wei, the biggest difficulty lies on the supervision and regulation, for which the government has not released any specific measures yet.
The measures of supervision and regulation should firstly be applied in the six groups, then step to step to the smelting and separation enterprises, finally to the downstream enterprises of the polishing, illumination, battery and magnet, which may purchase the large amount of the “dark rare earth” on the sly.
*This article is a re-edited and translated version by CCM. The original version comes from www.cnchemicals.com/.
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