With the approval of the State Council, China rare earth group was officially established on December 23, 2021. This is a new central enterprise with rare earth as the first main industry in China, which is a milestone in the development history of China’s rare earth industry.
It is worth mentioning that after the reorganization, the actual controller of China Minmetals Rare Earth Co.Ltd(000831) (000831. SZ) will be changed from China Minmetals to a new company. Affected by this news, as of the closing on December 23, China Minmetals Rare Earth Co.Ltd(000831) closed at 45.1 yuan / share, up 234.57% from the low of 13.48 yuan / share at the beginning of the year.
The third quarterly report of 2021 shows that the total operating revenue of China Minmetals Rare Earth Co.Ltd(000831) is RMB 2.003 billion, a year-on-year increase of 107.67%, the net profit attributable to the parent company is RMB 198 million, a year-on-year increase of 46.98%, and the average roe is 7.8%.
Some brokerage analysts told reporters that the rare earth industry will enter a continuous supply shortage pattern in the next few years, boost the stable rise of rare earth prices, and drive the performance release and value remodeling of Rare Earth concept stocks.
birth of new central rare earth enterprises
The newly established China rare earth group is formed by three rare earth companies of Aluminum Corporation Of China Limited(601600) group, China Minmetals and Ganzhou rare earth group, as well as two rare earth technology R & D enterprises of China Steel Research Technology Group and Youyan technology group.
According to the enterprise business information, the newly established China rare earth group is located at No. 16, Zhangjiang Road, Zhanggong District, Ganzhou City, Jiangxi Province. Its industry is non-ferrous metal smelting and rolling processing industry, which is directly supervised by the SASAC and has a registered capital of 100 million yuan.
Among them, SASAC subscribed 31.21 million yuan; Aluminum Corporation Of China Limited(601600) group, Ganzhou rare earth group and China Minmetals subscribed 20.33 million yuan respectively; The subscribed capital contributions of China Steel Research Technology Group and Youyan technology group are 3.9 million yuan respectively.
The shareholding structure of the new company is: the State Council holds 31.21%; Aluminum Corporation Of China Limited(601600) group, China Minmetals and Ganzhou rare earth group hold 20.33% shares respectively; China Steel Research Technology Group and Youyan technology group hold 3.9% respectively.
In terms of management, Ao Hong, director and deputy party secretary of Aluminum Corporation Of China Limited(601600) group, served as the legal representative and chairman of China rare earth group, China Minmetals Rare Earth Co.Ltd(000831) Chairman Liu Leiyun was the director and general manager of China rare earth group, as well as six directors, Yang Guoan, Zhang Shuqiang, Jin Yaohua, Yang Xiaobin, Zhang guohou and he Wenjian.
According to the financial client of CCTV, the establishment of China rare earth group is an inevitable requirement to follow the historical development law of rare earth industry, an urgent need for green development and transformation of rare earth industry, and an objective need for high-quality development of rare earth industry.
China is a large country with rare earth resources reserves in the world. It has the advantages of complete minerals and rare earth elements, high rare earth grade and reasonable distribution of ore occurrences. 98% of China’s total rare earth resources are distributed in Inner Mongolia, Jiangxi, Guangdong, Sichuan, Shandong and other regions, with the distribution characteristics of light in the north and heavy in the south.
Throughout the development process of China’s rare earth industry, the rare earth industry has experienced three formal integration since 2003. Although the disorderly development situation of “small, scattered, chaotic and weak” of rare earth enterprises has improved, it has not been able to meet the requirements of high-quality development.
China rare earth group will focus on the scientific and technological R & D, exploration and development, separation and smelting, intensive processing, downstream application, complete sets of equipment, industrial incubation, technical consulting services, import and export and trade business of rare earth, and strive to build a world-class rare earth enterprise group.
Institutional analysis believes that the newly established rare earth giant will account for nearly 70% of China’s total heavy rare earth, echo with China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) north and south, and shape a new pattern of two rare earth groups, one south and one north.
build a global rare earth “ace”
In this reorganization, the equity of several companies was transferred to China rare earth group as a whole. Galaxy Securities research report pointed out that the newly established rare earth company has a more comprehensive industrial chain, including rare earth mining, smelting, product processing, spot trading, etc.
In short, the integration subjects include China Minmetals Rare Earth Co.Ltd(000831) , China rare earth and southern rare earth at the upstream resource end, Ganzhou Zhonglan rare earth new materials at the downstream application end, and Jiangxi Ganzhou rare metal exchange, a rare earth spot trading service enterprise.
After this integration, the concentration of China’s rare earth industry will be greatly improved, and the state’s control over the rare earth market will be greatly strengthened.
At present, China has formed an industry pattern dominated by Chinalco, China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) , Xiamen Tungsten Co.Ltd(600549) , China Minmetals, Guangdong rare earth and southern rare earth. Among them, there is only China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) light rare earth, and the others are heavy rare earth companies.
It is understood that the total amount of rare earth mining in China is controlled. From 2019 to 2021, the mining indicators of rock type (light) rare earth mines increased by 1.2/0.8/28000 tons year-on-year, increasing year by year; The indicators of ionic (medium heavy) rare earth ores are 19150 tons.
Galaxy Securities research report pointed out that according to the total control indicators of rare earth mining and smelting separation in 2021, China rare earth group has rare earth mining and smelting separation indicators of about 52719 / 47129 tons of REO respectively, accounting for about 31% / 29% of the national total.
According to the data, the supply growth rate of rare earth industry decreased from 22% in 2018 to 5.3% in 2020. During the year, the ex factory price of praseodymium neodymium oxide rose to 857500 yuan / ton, nearly doubling year-on-year, the highest level in a decade.
Northeast Securities Co.Ltd(000686) said that in the short term, the contradiction between supply and demand may further intensify, and the driving force for the rise of rare earth prices is sufficient. In the long run, rare earth is at the starting point of a new era of supply and demand reconstruction. The reconstruction of the valuation system is expected to reproduce the logic of the high demand for lithium cobalt new energy in history in the future, and its supply end is even better than lithium cobalt.
For the new round of integration of the rare earth industry, Galaxy Securities Research Report believes that this is conducive to China’s strengthening control over the rare earth industry, helping the healthy development of the rare earth industry, making rare earth reflect its real value, and helping to gradually upgrade China’s rare earth resource advantage to China’s strategic advantage in foreign competition.
(21st Century Business Herald)
