China Minmetals Rare Earth Co confirmed on Wednesday that it would merge with two of China’s other top producers into a new company under the state assets regulator, creating a global force in the strategic industry.
China is the world’s dominant producer of rare earths, a group of 17 minerals used in consumer electronics and military equipment.
Moves to consolidate China’s “Big Six” state-run rare earth companies have been seen as a way to boost influence over pricing.
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 company, which was not named.
Daan de Jonge, a consultant at commodities data company CRU Group, said the combined entity would be second only to China Northern Rare Earth Group in terms of overall rare earths output.
It would account for about 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 supergroup,” he said.
China’s control of 85-90% of the rare earths processing sector means an uneasy reliance on Chinese supply for the US and Europe, especially at times of high trade tensions.
Minmetals Rare Earth said in a filing its parent had been notified by the State-owned Assets Supervision and Administration Commission (Sasac) that the merger had been approved.
- Reuters, with George Russell
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