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Commodities

China consolidates 3 rare earth miners into 'aircraft carrier'

Beijing reworks supply chain, bracing for long-term tensions with U.S.

Rare earths are loaded onto trucks at a port in China's Jiangsu Province. China is bolstering its rare earth supply chain as tensions with the U.S. drag on.   © AP

CHONGQING -- China on Thursday announced the merger of three state-owned rare earth miners into a company that will control nearly 70% of the country's output of key metals.

The new entity, China Rare Earth Group, brings together the rare-earth operations of Aluminum Corp. of China, China Minmetals and Ganzhou Rare Earth Group. The last is under the government of the Jiangxi Province city of Ganzhou, an area rich in these metals.

Beijing is tightening its grip on the country's supply chain for rare earths, which are essential for a wide range of high-tech products, in preparation for prolonged tensions with the U.S. The news follows the announcement of a strategic partnership between China Northern Rare Earth (Group) High-Tech and China Rare Earth Holdings.

China Rare Earth Group will be among the roughly 100 "central companies" directly overseen by the State-owned Assets Supervision and Administration Commission, which controls 31% of the new enterprise. Aluminum Corp., China Minmetals and the Ganzhou company each hold a 20% interest. The combined company has 100 million yuan ($15.6 million) in registered capital.

The new company is chaired by Ao Hong, deputy secretary of the Communist Party Committee at Aluminum Corp. Daily operations are headed by Liu Leiyun, a director at China Minmetals and an alumnus of Tsinghua University, Chinese President Xi Jinping's alma mater.

Chinese media reporting on the merger plans have called the combined company an "aircraft carrier" in reference to its sheer scale. It will hold almost 70% of China's production quota for medium and heavy rare earths, and nearly 40% for rare earths as a whole including light elements, according to information released by Beijing.

China accounts for about 60% of rare-earth output worldwide, U.S. Geological Survey data shows. Xi called the materials an "important strategic resource" in 2019. The government in January released a proposal for tighter oversight of the industry, which is being considered by China's legislature, the National People's Congress.

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