Source: miraitowa; Australian finance and Economics
In recent years, China has strengthened the strategic protection of rare earths and plans to restructure state-owned rare earth asset enterprises. This measure has recently aroused the concern of the Japanese media.
According to the Nikkei Asia review on October 24, China will restructure three rare earth producers to become a state-owned enterprise, accounting for nearly 70% of the domestic rare earth production quota. The move aims to accelerate the development of rare earth resources and processing technology and strengthen control over the mining industry in response to the protracted trade tensions between China and the United States, the report said. The move comes as the United States is seeking to work with Australia to establish an alternative rare earth supply chain. Analysts warned that this could affect rare earth supplies to Japan and the United States.
Rare earth is known as the "universal land", which is widely used in new energy, new materials, aerospace, electronic information and other fields. Up to now, it has been listed as "key mineral" by many countries. China has the world's largest rare earth mine, but it has been mined as iron ore for more than 60 years. It has been difficult to get rid of the embarrassment of "digging and selling soil" and selling rare earth into "cabbage price" for many years.
China is the world's largest producer, exporter and consumer of rare earths. It has two dominant positions in rare earth resources and market, but it has not obtained the corresponding rare earth pricing power. The main reason is that China's six rare earth groups and their subordinate enterprises are still fighting their own battles in the production and sales links, the internal competition in the industry is chaotic, and the phenomenon of low-cost export of rare earths is exacerbated.
According to media reports, China's state-owned China Minmetals Corporation (CMC), China Aluminum Corporation (CAC) and Ganzhou municipal government in Jiangxi Province, which is famous for rare earth mines, announced that they would strategically restructure their rare earth undertakings. Minmetals rare earth announced that the relevant plan has not been finalized and needs to be approved by the relevant competent authorities.
Among the three parties mentioned in the announcement, Minmetals Group and Chinalco are one of China's six major rare earth groups. Ganzhou is a well-known "Rare Earth Kingdom" and the main place of discovery of ionic rare earths in southern China. 70% of the medium heavy rare earths in the world are produced here every year; Ganzhou rare earth group Co., Ltd., controlled by Ganzhou SASAC, also holds about 94% of the shares of Nanfang rare earth group, one of the six rare earth groups.
Peng Huagang, Secretary General of SASAC, recently said that the Chinese government will restructure the rare earth industry to establish a world-class company. The new company will account for about 70% of the production quota of medium and heavy rare earths and nearly 40% of the overall rare earth production (including light rare earths).
The analysis shows that the restructured China rare earth new company will undoubtedly conduct more centralized management and production of China's rare earth assets, enhance China's pricing power in the world rare earth market and the political influence of rare earth as a strategic resource.
For example, the Nikkei Asia review said that China could use rare earths as a diplomatic trump card. When Japan nationalized the Diaoyu Islands in 2010, China blocked rare earth exports to Japan as a way to put pressure on Japan. China's new move to restructure the rare earth industry has been highly concerned by Japanese analysts, who warned that it may affect the supply of rare earth to Japan and the United States. According to the U.S. Geological Survey, China's rare earth production accounts for 60% of the world's total production. The largest export destination of China's rare earths is Japan (49%), followed by the United States (15%).
The successful reorganization of China's state-owned rare earth assets is a key step in the rare earth defense war.