China Mulls Unifying Its Many Rare Earths Manufacturers

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(IBTimes) - China, stronghold of the world's supply of rare earths, is set to carry out a proposal of uniting its many rare earths manufacturers into a one large company that represents the entire sector.

Chen Yanhai, chief secretary of the Resource Department from China's Ministry of Industry and Information Technology, said the government has come out with a plan to restructure the industrial capability of its rare earths sector in order to better improve its manufacturing efficiency.

"China has set a major direction for an industrial transformation in the rare earth manufacturing area. The government will establish a platform for companies with good reputations in the industry to make the first step. Local competitors can later merge into larger enterprises. Also, this process is the inevitable result of this industry," Mr Yanhai told China Radio International ( CRI ) in an interview.

Government intends to carry out the full merger and upgrade of its rare earths sector within two years, Mr Yanha said.

However, state-owned miner and manufacturer China Minmetals Company, although it welcomed the proposal, said the government's intention of merging highly dispersed resources into large ones in two years is ambitious, CRI reported.

"We have to meet three goals - high-end development, green development, and innovative development. If not, the restructure to improve exploitation and manufacturing efficiency is just a hollow word," Zhou Zhongshu, president of China Minmetals Company, said.

Upgrading the whole system also meant investing a lot of resources, he added.

"Moreover, we need to build a consistent industrial chain. We can make full use of our resource advantage to introduce more advanced technology from foreign countries," Mr Zhongshu said.

China supplies more than 95 per cent of the world's rare earth elements. But rampant and illegal exploitation have caused serious environmental problems, not to mention resources gone to waste because of excessive production. These very reasons ultimately forced the country to limit its exports of the precious elements since 2009.

CRI reported the industrial restructure could be easier said than done. More than half of resources used by the state-owned mines may be reused and recycled. But for those mined by small companies and illegal exploiters, the percentage could be as low as anywhere from 5 per cent to 40 per cent. 

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This article appears in: Investing , Commodities

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