Panxi Rare Earth is Facing Integration, JCC “Introduced Aid” to Confront Chinalco



Panxi Rare Earth is Facing Integration, JCC “Introduced Aid” to Confront Chinalco

Although the rare earth industry now still remained in recession, enterprise enthusiasm for integration never waned. As one of the key strategic resources, rare earth received much favor from capital ever since the beginning of industrialization. As early as many years ago when Sichuan started to rectify the rare earth industry, Jiangxi Copper Rare Earth began to diligently make deployment in Sichuan, under the general trend of rare earth integration by the state government, Chinalco also entered Sichuan rare earth market early this year, the two enterprises took a series of actions which were subsequently interpreted as see-saw struggle and standoff for integration.

The reporter of the National Business Daily confirmed from insiders of the Jiangxi Copper Rare Earth and chief person of Sichuan Province Economic and Information Technology Commission that Jiangxi Copper Rare Earth would join hands with Ganzhou Rare Earth Group which owns rare earth integration qualification.

Speaking of the competition between Chinalco and Jiangxi Copper Rare Earth, Wang Hailin, Director of Sichuan Province Economic and Information Technology Commission, said in the end there must be one enterprise after integration, each side should take out advantages to contribute to the combination, whereas any behavior to only integrate upstream mineral resources is not welcome. About the recent personnel change in Chinalco, one official of Liangshan Prefecture told the reporter that this added uncertainty to the integration of Sichuan Rare Earth.

At the Rare Earth High-tech Industrial Park in Mianning County, Jiangxi Copper Rare Earth is the dominant enterprise of the entire industrial park. The reporter learned from the Rare Earth Industrial Park side that, this company’s rare earth mining and dressing and rare earth magnetic material project involved total investment of 4.55 billion yuan, up till now it has completed 2 billion yuan of investment, after reaching full production capacity each year it can fulfill 1.27 billion yuan of output value. The reason that Jiangxi Copper Rare Earth splashed out huge investment into Mianning is that it has obtained exclusive ownership of China’s biggest singular rare earth mine.

Sichuan Liangshan Prefecture is one of the three major light rare earth raw ore supplying sites in China, its light rare earth reserve ranks second nationwide, up till now it has proved 65.7926 million tonnes of rare earth retained reserve. Liangshan Prefecture’s rare earth resources are collectively distributed in Mianning County and Dechang County, which constitute a south-north direction 300km long rare earth ore belt in the western part of Sichuan Province. Maoniuping in Mianning County has 2.94 sq km of rare earth mine with mining right, with a retained reserve of 1.57 million tonnes, after supplemental geological prospecting its reserve reached 3.20 million tonnes.

Jiangxi Copper Rare Earth was founded in Sichuan Province Mianning County in August 2008. Its shareholding structure is Jiangxi Copper Corporation holds 51% stake, Shuyu Mining Company which represents Sichuan state-owned assets holds 39% stake, Mianning County Investment Development Co., Ltd holds 10% stake.

After nearly 6 years of diligent development, by relying on its advantage of naturally endowed resources, Jiangxi Copper Rare Earth has grown into one of the most important rare earth ore mining, dressing, and smelting separation, deep processing enterprises in China, it has developed 660,000 tonnes of annual raw ore processing ability, and is equipped with 20,000 tonnes of rare earth concentrate production ability.

According to documents shown by Jiangxi Copper Rare Earth to reporters of the National Business Daily, currently the company is quickening the pace to push forward mine development project construction with planned investment of 3.5 billion yuan, meanwhile it continually push forward downstream industry construction, and continually extend industrial chain through integration, M&A, and share participation methods.

According to the “Guideline for Large Rare Earth Enterprise Group Organization Work” plan unveiled by the MIIT early this year, the whole nation plans to develop six big rare earth groups. Up till now, those who have definitely received MIIT reply documents include Baotou Steel Group, Chinalco and Xiamen Tungsten, apart from the above three companies, Ganzhou Rare Earth, China Minmetals and Guangsheng Nonferrous Metals are still waiting for approval of the integration plan.

Despite its diligent development efforts in Sichuan, Jiangxi Copper Rare Earth is excluded from the state government’s integration sequence, whereas Chinalco relied on policy advantage to enter Sichuan. In March this year, Chinalco joined force with Sichuan local enterprises including Shenghe Resources to set up Chinalco Sichuan Rare Earth Co., Ltd in Dechang County, Liangshan Prefecture.

Unwilling to take it lying down, Jiangxi Copper Rare Earth almost at the same time joined hands with five enterprises including Sichuan Wankaifeng Rare Earth New Energy Technology Co., Ltd, Liangshan Prefecture State-owned Investment Co., Ltd to jointly set up Sichuan Jinpanxi Rare Earth (Group) Co., Ltd (Jinpanxi), and proposed the vision to build 100 billion rare earth industry cluster.

Sichuan Rare Earth integration encountered opposition between Chinalco and Jiangxi Copper. Jiangxi Copper Rare Earth seemed to be very confident, according to Jinpanxi’s development target, this company will progressively improve rare earth mining & dressing ability, expand separation, smelting and deep processing production scale, striving to fulfill over 30 billion yuan of income from main business in the near future, in the mid-term it will fulfill over 50 billion yuan of income from main business, in the long term it will fulfill 100 billion yuan above of income from main business.

Nevertheless, in November this year, reporters of the National Business Daily learned from relevant insiders of the Mianning Rare Earth Hi-Tech Industrial Park that although Jinpanxi has been established, up till now there is no substantive industrial investment.

In the face of fast-paced challenging moves from Chinalco side, Jiangxi Copper Rare Earth seems to have the only option to look for “foreign aid”, since it had no qualification as integration entity. According to a report on the” 21st Century Business Herald” on August 21, Jiangxi plans to use Ganzhou Rare Earth as the main entity to introduce Sichuan Jinpanxi Rare Earth, and participate in the organization of Ganzhou Rare Earth Group, Sichuan Ganzhou Rare Earth “alliance” attracted attention from the public.

Ganzhou Rare Earth Group was founded in 2013, Jiangxi positioned it as the main platform for organizing large rare earth group in South China, it is among six major rare earth groups approved by the State Council. Also, Jiangxi Copper Rare Earth and Ganzhou Rare Earth both belong to Jiangxi state-owned assets.

Insiders of Jiangxi Copper Rare Earth indicated to the reporter of the National Business Daily that Jiangxi Copper Rare Earth is a subordinate unit controlled by Jinpanxi through shareholding. Regarding the previously leaked news about cooperation between Jinpanxi Rare Earth and Ganzhou Rare Earth, this insider said, “both sides have signed cooperation agreement, the plan has been submitted to the MIIT. ”

One industry analysts pointed out Chinalco’s integration of Sichuan rare earth conformed to the national rare earth integration strategy, whereas Jiangxi Copper Corporation was not included in the name list, in order to stand out in competition, it must join hands with an enterprise included in the rare earth large group organization name list, whereas Ganzhou Rare Earth which belongs to the same Jiangxi state-owned asset is very likely to be included.