China Minmetals Rare Earth Co, on Wednesday, confirmed a merger with two of China’s other rare earth producers creating a global force in the strategic industry.
Rare earth is a mix of 17 minerals, used in the production of consumer electronics and military equipment. China is currently the world’s dominant producer of rare earths, controlling between 85-90 per cent of the rare earths processing sector.
Moves to consolidate China's “Big Six” state-run rare earth companies have been viewed as a way to boost influence on pricing, a Reuters report reads. China’s control of the rare earths sector has already caused concern to other countries’ strategic industries that rely on these materials. In February, the Financial Times reported that Beijing was exploring limiting the export of rare earth minerals with an eye on affecting the production of the fifth-generation F-35 stealth fighter jet, which the US makes and exports to partner countries.
The merger would make the unit second to Northern Rare Earth Group in terms of output and account for around 70 per cent of China's rare earths production, based on quotas for the first half of 2021, CRU Group consultant Daan de Jonge said.
“This will mean that the pricing power of key rare earths, such as dysprosium and terbium, will be in the hands of one 'super group',” de Jonge said.
Two key inputs for rare earth magnets, dysprosium and terbium are used in everything from electric vehicles to wind turbines. Prices for both dysprosium and terbium has increased by 50 per cent in 2021.
A fledgling firm, Jiangxi Ganzhou Rare Metal Exchange Co and Ganzhou Zhonglan Rare Earth New Material Technology Co will also be folded into the new entity. That means heavy rare earths would still need to be separated in China, de Jonge noted. Minmetals had indicated in September that such a merger is underway. Minmetals indicated that the regrouping had been approved by its parent company, the State-owned Assets Supervision and Administration Commission (Sasac).
Earlier this year, in a bid to counter China’s control over the rare earths market, the Joe Biden administration held a review of critical supply chains, in addition to funding the expansion of Lynas Rare Earths, the largest rare earths producer outside of China.
