Three of China’s biggest rare earth producers to merge into strategic giant

China Minmetals Rare Earth Co has announced a merger with two of China’s other top rare earth producers, creating a global force in the strategic industry.

Under the merger, the equity of Minmetals Rare Earth, Chinalco Rare Earth & Metals Co and China Southern Rare Earth Group Co will transfer into a new unnamed company under the state assets regulator.

CRU Group consultant Daan de Jonge said the combined entity would be second only to China Northern Rare Earth Group in terms of overall rare earths output and account for around 70% of China’s heavy rare earths production, based on quotas for the first half of 2021.

“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’,” he said. Prices for dysprosium and terbium – key inputs for magnets used in electric vehicles and wind turbines – are up around 50% in 2021.

Moves to consolidate China’s ‘Big Six’ state-run rare earth companies have been seen as a way to boost influence over pricing.

China is the world’s dominant producer of rare earths, a group of 17 critical minerals used in consumer electronics and military equipment. The global superpower’s control of 85-90% of the rare earths processing sector means the US is hugely reliant on Chinese supply, which has been a cause for concern especially during recent trade tensions.