Big Integration Being Conducted in Rare Earth Industry in China

On January, 1st, 2024, Rising Nonferrous Metals made the announcement, indicating that in order to further deepen the reform of state-owned enterprises, optimize resource allocation, and practice the safeguarding responsibilities for national strategic resources, Rising Holding Group will transfer 100% equity of Guangdong Rare Earth Group (held by Rising Holding Group) to China Earth Group, so as to support and promote professional integration on rare earth resources in Guangdong by China Rare Earth Group. According to information, the aforesaid change in equity will be achieved in the form of gratuitous transfer of 100% state-owned equity. After the change, the actual controller of Rising Nonferrous will be changed from Guangdong Province SASAC to China Rare Earth Group, and the latter will indirectly hold 129,372,517 shares of Rising Nonferrous (accounting for 38.45% of total shares of the Company) through Guangdong Rare Earth Group. The equity of Rising Nonferrous held by Rising Holding Group will fall from 40.52% to 2.06%.

According to information, on December, 23rd, 2021, China Rare Earth Group was officially established in Ganzhou, Jiangxi. The establishment not only incorporates reorganization and integration conducted by Aluminum Corporation of China, China Minmetals Group Co., Ltd. and Ganzhou Rare Earth Group Co., Ltd., but also introduced two scientific and technological enterprises, i.e. China Iron & Steel Research Institute Group and China Grinm Group Co., Ltd. The Company is affiliated to SASAC. Currently, China Rare Earth Group owns one listed company, i.e. China Rare Earth.

Although it has just been two years since its establishment, China Rare Earth Group has been making progress. On September, 13th, 2022, Minmetals Rare Earth announced that(accounting for 16.1% of the Company) have been gratuitously transferred to China Rare Earth. In December in the same year, China Rare Earth Group and Rising Group entered into, indicating that they are going to carry out communication, resource integration and industry complementation in terms of rare earth industry, scientific research and talents and so on, which created the foundation for the aforesaid gratuitous transfer. In December, 2023, according to the release from Xiamen Tungsten, the listed company affiliated to Fujian Rare Earth Group, Fujian Rare Earth Group and China Rare Earth Group plan to co-operate Changting Zhongfang Rare Earth Mine in the form of co-establishing a new company. The project will be entrusted to a Joint Venture by the Company and China Rare Earth Group. Guangdong, Fujian and China Rare Earth Group are accelerating the deployments in all areas.

China is the biggest rare earth reserves country and the biggest rare earth producing country in the world. However, albeit many times of integration, rare earth enterprises are still developing in disordered manner, featuring disadvantages of “small, scattering, messy, weak”. Intensive development path that features mergers and reorganizations and optimized market configuration of resource is an inevitable path for Chinese rare earth industry. According to industrial experts, the actual controller of Rising Nonferrous being changed to China Rare Earth Group is not only another major move right after the strategic reorganization of China Rare Earth Group, but also a phased milestone in integration of rare earth industry. As a national strategic resource, rare earth being swiftly integrated will effectively improve industrial concentration degree, consolidate voice on the price of rare earth product, and drive sound development of the whole industry chain. China attaches great importance to the development of rare earth industry. The integration of China Rare Earth Group will consolidate the concentration degree of our rare earth industry and strengthen the controlling power on price. As China Rare Earth Group is gradually completing the integration of southern rare earth market, the industrial pattern of Southern Power and Northen Power is manifesting itself (China Rare Earth Group and China North Rare Earth (Group) High tech Co., Ltd.).

In 2023, overall speaking, demands in rare earth industry were weak, and product price was in depression. However, according to analysts, rare earth market in 2024 will recover a bit. On January, 2nd, according to analysts, rare earth market will rise on the whole in 2024, and the lowest price will emerge in Q2. According to the article, there is some increase in mining yield of rare earth in China in 2023. Nowadays, Chinese government is raising stricter rectifications on rare earth industry, and enterprises without exploiting indicators are forbidden to make exploitation without permission. The fast development of NEV is providing strong support for demands in rare earth market. Therefore, the gap still exists in rare earth demands. In 2024, rare earth industry will make improved development, which indicates our decision to make long-term green development in rare earth.