Introducing Two Central Enterprises to Integrate Rare Earth Industry, Shandong Rare Earth Group Breaks Surface

With the signing of “Letter of intention for Propelling Integration of Shandong Rare Earth Enterprises“ between Shandong Province Commission Of Economy and Informatization, China Iron & Steel Research Institute Group (“China Steel Institute”), and China Rare Metals & Rare Earth Co., Ltd (“China Rare Earth ”), the “Shandong Rare Earth Group” jointly set up by the 3 units thus broke surface. On August 9, reporters of the China Economic Herald learned from Shandong Province Commission Of Economy and Informatization that, the Provincial Commission of Economy and Informatization has signed “Letter of Intention for Propelling Integration of Shandong Rare Earth Enterprises” with China Steel Institute and China Rare Earth, which attempted to drive forward integration and acceleration of Shandong rare earth industry through diversified cooperation, close cooperation between industry, university and research sectors, and exploring new model of cooperation between government and enterprises via economic means,.

Wang Zhaochun, Deputy Director of Shandong Province Commission of Economy and Informatization, previously indicated when receiving interview from reporters of the Economic Herald that, although Shandong’s rare earth application industry started late, it has high starting standard, and broad fields being involved, in particular it boasts leading position in rare earth permanent magnet sector. In recent years, all rare earth enterprises grabbed opportunities, intensified efforts in transition and upgrading, actively developed high-end application products, and reserved a batch of rare earth deep processing projects, which lay down solid foundation for Shandong Province to further develop rare earth industry. According to reporters of the Economic Herald, as early as in 2008, the China Rare Earth Holdings Limited under Chinalco invested 800 million yuan to cooperated with Weishan County Cuizhuang Mine Investment Co., Ltd which holds 30% stock equity of Shandong Weishan Lake Rare Earth Co., Ltd to build Rare Earth Industrial Park.

In 2011, by acquiring 40% equity of Shandong Weishan Lake Rare Earth Co., Ltd, China Steel Institute holds controlling stake in this enterprise, which is one of the three major light rare earth bases in China, meanwhile it invested 2 billion yuan in Weishan County Economic Development Zone to construct rare earth industrial park. Up till now, China Steel Institute controlled 3 rare earth enterprises in Shandong Province including Weishan Lake Rare Earth, Weifang ShouguangHongda and LiaochengShangda Rare Earth, involving production fields of mine, smelting and separation, and rare earth hydrogen storage materials, it owns the only rare earth mining license in Shandong Province.

“ This time’s cooperation will combine Chinalco’s advantages in management and capital, China Steel Institute’s advantages in technology and R&D as well as the policy and coordination advantages of the provincial Commission of Economy and Informatization, so as to fulfill win-win development.” According to Ding Haiyan, Assistant to Chinalco General Manager and President of China Rare Earth, Chinalco adopted China Rare Earth Company as the platform to push forward the integration of Shandong Province rare earth industry. Early last year, China Rare Earth Company held consultation with China Steel Institute over the integration of Shandong rare earth industry, and reached agreement with China Steel Institute over cooperation in integrating Shandong Province’s rare earth mines, smelting and separation enterprises.

Li Bo, Deputy General Manager of China Steel Institute, said, the union of three sides would facilitate speeding up the integration of Shandong rare earth industry, so as to optimize resource allocation and industry deployment of the rare earth industry. After completing the acquisition of Weishan Lake Rare Earth, China Steel Institute started construction to build projects including Weishan Rare Earth Material Engineering Research Center, Rare Earth Burnishing Powder, Permanent Magnet and Hydrogen Storage Alloy Dedicated Rare Earth Metal Raw material, and Rare Earth Industrial Park supporting public facilities.

As one of the few places of origin of rare earth in North China, it’s not surprising for Shandong to join hands with central enterprises to jointly set up Shandong Rare Earth Group this time.

“Weishan Lake Mine boasts large geological reserves, which ranks second nationwide, the proved reserve has reached 12.70 million tones of REO (rare earth oxide), accounting for 9.6% of national total, the industrial reserve is 4 million tonnes of REO, accounting for 7.7% of national total. Weishan Lake Rare Earth Mine is currently one of the three major light rare earth bases in China.” Wang Guozhen, Professor of China Nonferrous Engineering and Research Institute, told the reporter of the Economic Herald, because Shandong rare earth includes low sulfur content, which makes it easy for separation and refinement, it has always been regarded as the representative of light rare earth. Compared with heavy rare earth which is mainly used in military production fields, light rare earth is mainly used in civilian industries such as automobile industry.

As early as in 2012, Shandong Province Commission of Economy and Informatization took the initiative to organize more than 20 rare earth upstream and downstream enterprises in Shandong Province to set up Shandong Province Rare Earth industry Alliance, and put forward the concept to leverage the alliance to seek advantageous position for Shandong rare earth enterprises in the macro pattern of national rare earth industry integration.

According to statistical data, in Shandong there are a total of more than 20 enterprises engaged in 3 kinds of businesses including rare earth ore mining, rare earth smelting and separation, and rare earth deep processing, wherein, there are 1 mineral product mining enterprise, 2 smelting and separation enterprises, and 20 plus deep processing application enterprises.

According to information from the Raw Material Industry Section of Shandong Province Commission of Economy and Informatization, at present there are 25 deep processing and high-end application projects now under construction by Shandong Province rare earth enterprises, with a total investment of 6.5 billion yuan.

“At present, the reform of China’s rare earth industry is making continual progress, industry integration is also picking up speed. China Steel Institute enjoys relatively powerful technological advantages in rare earth downstream deep processing aspect, and has developed certain production capacity and scale. Chinalco also boasts capital and network advantages. The organization of Shandong Rare Earth Group by the three sides will facilitate the establishment of an industrial chain platform with mutual support and growth among Shandong rare earth raw material, and deep processing application industry and related hi-tech industries, so as to push forward rapid development of Shandong rare earth high-end application industry.” Wang Guozhen said.