Rare earth integration: on December 22, the SASAC of the State Council studied and reported to the State Council for approval. The State Council approved Aluminum Corporation Of China Limited(601600) Group Co., Ltd. (hereinafter referred to as "Chinalco"), China Minmetals and Ganzhou Municipal People's government to carry out the strategic reorganization of relevant rare earth assets, set up a new company controlled by the SASAC of the State Council, and the equity of relevant companies was transferred to the new company.
——Does the integration meet expectations? This integration is a milestone in the rare earth industry since the six major groups in 2013. On the one hand, the policy core of the rare earth industry always reflects the national strategic direction and corresponds to the necessity of participation at the level of state-owned holding central enterprises; On the one hand, the integrated participants China Minmetals Rare Earth Co.Ltd(000831) group, China rare earth group and south rare earth group will have a total light rare earth mining index of 48500 tons in 2021, accounting for 32.6% of the total light rare earth; The quota of ionic ore is 12950 tons, accounting for 67.6% of the quota of medium and heavy rare earths; From the announcement in September to the implementation of integration, a competition pattern of two large ( China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) and new rare earth group) and two small (considering that Rising Nonferrous Metals Share Co.Ltd(600259) and Xiamen Tungsten Co.Ltd(600549) have non rare earth business) may be formed.
——How does integration affect rare earth prices? First of all, without considering the integration, there has been a big turning point in the supply and demand of rare earth since 2020. On the supply side, there is almost only an increase in China in the short and medium term, and the growth rate is relatively moderate under the background of rare metal management regulations. On the demand side, the penetration rate of high-performance Nd-Fe-B superimposed industrial motors for air conditioners and new energy vehicles has increased, corresponding to the continuous growth of demand for praseodymium, neodymium, dysprosium and terbium, Therefore, we can see the sustainability of the overall high price center (from October 2020 to now). After this integration, the voice of corresponding medium heavy rare earth (strategic resources) will be further strengthened, but in fact, the market supply and demand situation has been greatly reversed, thus supporting the sustainability of profits.
Rare earth quota: Notice of the Ministry of natural resources on Issuing the total amount control index of rare earth and tungsten mining in 2021, In 2021, the total mining control index of rare earth mines (rare earth oxide REO, the same below) in China was 168000 tons, including 148850 tons of rock type rare earth mines (mainly light rare earths) and 148850 tons of ionic rare earth mines (mainly medium and heavy rare earths) index 19150 tons. In 2021, the total amount of rare earth mines increased by 20% year-on-year, and the quota of the first batch was the same. In terms of breakdown structure, the light rare earths were 148850 tons, an increase of 23.17% year-on-year, the second batch was 5% higher than the first batch, the medium and heavy rare earths were 19150 tons, the same year-on-year, and the second batch was 33% lower than the first batch. In terms of breakdown area, Inner Mongolia ( China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) The second batch of quotas of the group) is the only region with month on month growth, with a significant increase of 27.4%, accounting for 67% of the quota of light rare earths and 60% of the total. The leading position continues to be prominent. Sichuan (Chinalco rare earth group & Sichuan Jiangtong rare earth) increased by 3% year-on-year to 44200 tons, but the second batch fell by 29% month on month, which means that the increment is reflected in the supply in the first half of the year. While ionic rare earth fell month on month in Fujian, Jiangxi, Guangxi and Guangdong, which is flat throughout the year, and the strategic resource position of medium heavy rare earth is expected to be further highlighted. Under the background of integration, the concentration of supply pattern is expected to be further improved Step up.
Risk tip: the demand for rare earth is significantly lower than expected, China's rare earth policy is lower than expected, Myanmar's import is higher than expected, and overseas mineral supply is higher than expected
