Baotou Steel integrates 12 rare earth producers

The Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co, China's largest rare earth producer, signed an integration agreement with 12 rare earth producers in Inner Mongolia autonomous region on Thursday.

The move marks the latest step towards the establishment of the Northern Rare Earth Group and the concentration of the light rare earth industry in Northern China, according to the China Securities Journal.

Baotou Steel's integration efforts started last year.

The Inner Mongolia autonomous region government first issued the integration plan for rare earth upper stream enterprises in the region in May 2011, the journal said.

The plan listed 35 rare earth miners and processors within the framework with Baotou Steel Rare-Earth (Group) Hi-Tech in charge of mining, selection of mine locations, processing, management and separation.

In April this year, the organization offered subsidies to 22 upper stream rare earth companies that were closed and opened the integration process to another 13 enterprises.

The final list of companies to be integrated include Baotou Jinmeng Rare Earth Co Limited, Baotou Xinyuan Rare Earth Hi-tech and New Material Co Ltd and Baotou Xinye New Material Co Ltd.

According to the latest agreement, 12 companies and their shareholders have agreed to handover 51 percent of their company shares to Baotou Steel Rare-Earth (Group) Hi-Tech.

After completion of the integration, Baotou Steel will be responsible to marketing and sales strategy and their industry and product layout.

Meanwhile, the company will provide support to the 12 companies including on production and export quotas.

In August, general manager Zhang Zhong said the company will lead the establishment of China North Rare Earths (Group) Hi-tech Co, with the company's light rare earth output expected to account for more than half of the world's total.

He said that to form the mega-corporation, the group will team up with major rare earth producers in Gansu, Sichuan and Shandong provinces to integrate light rare earth resources in the country's northern region.

The proposed group will also actively participate in the restructuring of rare earth enterprises in the southern provinces, which are known for their heavy rare earth production, Zhang said.

China plans to foster two or three large rare earth enterprises by consolidating companies in the sector, Minister of Industry and Information Technology Miao Wei said in March.

As the world's largest producer of rare earth metals, China now supplies more than 90 percent of global demand for the metals, although its reserves account for just 23 percent of the world's total.