BEIJING - China Minmetals Corp, the country's largest metals trader, and Guangdong Rising Nonferrous Metals Group Co will obtain stakes in Ganzhou Rare Earth Mineral Industry Co.
Ganzhou Rare Earth owns most of the mining licenses for rare earths in Jiangxi province, which is the nation's largest producer of ion-absorbed type rare earths.
The company is currently undertaking a restructuring process to become a group, and will buy back all the rare-earth resources from local miners. The new group will be listed and a proportion of its shares will be allocated to companies that have invested in rare-earth processing in the province, Wang Ping, the mayor of Ganzhou city, told China Daily.
China Minmetals, Guangdong Rising Nonferrous Metals, and JLMAG Rare-earth Co Ltd will hold stakes in the group, which means they will have indirect access to resources, he said. "Chinalco (Aluminum Corporation of China) will not be involved in the new group," said Wang.
"We will not give away any resources to companies that haven't invested in the rare-earth processing sector," he said.
Earlier reports said Minmetals and Chinalco are competing to develop rare-earth resources in Jiangxi, which has verified reserves of 2.89 million tons of ion-absorbed type rare-earth elements, accounting for 40 percent of the national total.
Chinalco announced in September 2010 that it had acquired a majority stake in Jiangxi Rare Earth and Rare Metals Tungsten Group (JXTC) and planned to invest 10 billion yuan ($1.5 billion) during the next three to five years to gain rare-earth resources in the province.
Ganzhou Rare Earth has already reduced the number of mining licenses to 42 from 88 last year, and will further merge them into one license, Wang said.
"Although Ganzhou Rare Earth holds all the mining licenses, it is like a billing company. Rare-earth resources have been exploited by local miners and when they want to sell the minerals they will need to obtain a quota from Ganzhou Rare Earth," he said.
"The new group will have actual power in controlling rare-earth resources after it consolidates all the mining licenses into one," he added.
Rare earths, a group comprising 17 elements, are used in a number of high-tech areas, such as wind turbines, missile guidance systems, hybrid car batteries and Apple Inc's iPads.
Large State-owned mining companies are all eyeing at getting a slice of the cake from the strategic resources.
Although those central State-owned companies have entered the processing sector, they have not been involved in the mining sector, which is the most critical aspect.
As the world's largest rare-earth producer and exporter, China has seen reserves depleted and suffered environmental damage as a result. In response, the government has implemented a number of measures to combat illegal mining and to accelerate the consolidation of the scattered industry.
The provinces of Jiangxi, Fujian, Guangdong, Hunan, and the Guangxi Zhuang autonomous region are known as the five areas in southern China rich in the medium-heavy rare earths.
Minmetals said it planned to invest 1 billion yuan in rare-earth processing projects in Ganzhou city, in Jiangxi province, over the next two years to obtain mining rights.
Legislation from Ganzhou's local government in 2008 ruled that only companies that had made an investment of more than 1 billion yuan in the city over a three to five year period were eligible to acquire local mining rights.
"The rule has been changed. We will not issue mining licenses to other companies, but they will be able to obtain access by acquiring stakes in our new group," said Wang.
Minmetals is also eyeing rare-earth mines in Guangdong and Hunan provinces.
On March 4, the company signed an agreement to jointly explore rare-earth resources with the government of Heyuan city in Guangdong province, whose rare-earth reserves account for 20 percent of the total in southern China.
Minmetals has said that it plans to invest at least 4.5 billion yuan over the next five years to explore minor metals, including rare earths, in Hunan province after it acquired a 51 percent sake in Hunan Nonferrous Metals Corp.
Meanwhile, Chinalco was reported to have been negotiating a potential partnership with Qingyuan, another city in Guangdong province, to develop rare- earth resources.
The company is also interested in rare-earth mines in Guangxi Zhuang autonomous region, where it plans to set up a joint venture with Guangxi Non-Ferrous Metal Group to jointly exploit rare-earth mines.