TAIPEI (Taiwan News) — China is on the cusp of announcing a merger of three existing state firms into a new rare-earth mega-enterprise called China Rare Earth Group.
Sources familiar with the plans said the new firm may be announced this month and will be headquartered in southerly Jiangxi province, which is home to an abundance of natural resources, according to a Wall Street Journal report.
China Minmetals Corporation, Aluminum Corporation of China, and Ganzhou Rare Earth Group Company will all be subsumed into the new group. It remains to be seen whether the new company will coordinate with Baotou Iron and Steel Group, which dominates rare-earth mining in Inner Mongolia in the country’s far north.
The move will centralize Beijing’s control over the pricing of the strategically important minerals and keep Chinese firms from breaking ranks as competition with Western firms heats up.
The U.S. and its allies are increasingly concerned China may choke off access to the metals, which are vital to the functioning of a variety of cutting-edge technologies, from fighter jets to wireless headphones and wind turbines and touch screens.
Lynas, an Australian company that is the largest rare-earth player outside of China, signed a deal with the U.S. government in January to set up a rare-earth separation plant in Texas. Separating rare-earth elements is a complex and energy-intensive process that takes the melded compounds dug out of the ground and gradually refines them into their pure state.
The plant will take material directly from the company’s Western Australian assets — a cracking and leaching facility in Kalgoorlie that processes deposits mined at Mount Weld, an ancient volcano filled to the brim with rare-earth elements, per Chemical Engineering.
The output will be used both for the U.S. defense industry and for the growing commercial market, especially in electric vehicles and green technologies.
China Rare Earth Group is but the latest milestone in China’s long drive to centralize the sector, per WSJ.
In 2014, Beijing whittled the existing firms down to six entities and set production and export quotas between them. This is much like how OPEC tries to control the supply of crude oil for the benefit of its members. However, in this case, the targets are set by one single government rather than a consortium of producers.
At the time, the U.S. successfully won a case against China at the World Trade Organization, which ruled Beijing had manipulated the prices of tungsten and molybdenum by restricting the export of the elements.