This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Rare Earth “Mega-company” Taking Shape

Rare Earth “Mega-company” Taking Shape

In a move that reflects China's intent to retain its dominance over the rare earth element (REE) market, the country's largest producer confirmed that it is taking steps to gain control of 12 other firms. If successful, it will effectively form the world's first REE “mega-company.”

Inner Mongolia Baotou Steel Rare-Earth (SSE: 600111) recently signed an integration agreement with 12 other rare earth producers in the Inner Mongolia autonomous region, China Daily reported. The move marks the boldest step yet in the establishment of the Northern Rare Earth Group and highlights the company's intent to concentrate the light REE industry primarily in Northern China.

The agreement, which will be valid for a one-year period, state that the 12 parties will each transfer a 51-percent stake to Baotou Steel Rare-Earth at no cost, according to China Daily.

Although its reserves account for only 35 percent of the world's total, China remains the world's largest REE exporter, producing more than 90 percent of global output.

Timing questionable

News of the integration dates as far back as May 2011, when China's regional government issued an integration plan for upstream REE enterprises in the area.

At the time, the Chinese government professed its intention to consolidate the industry over a period of two years, allowing the largest companies to take over smaller producers. Inner Mongolia Baotou Steel Rare-Earth was touted as the most likely candidate to benefit from a consolidated market. China justified the move by citing the need to eliminate small-scale rare earth producers due to environmental concerns.

The State Council confirmed its aim to concentrate 80 percent of Southern China's heavy rare earth mining assets in three of the country's largest companies, local media reports noted at the time.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,191.37 -195.84 -1.13%
S&P 500 2,002.16 -27.39 -1.35%
NASDAQ 4,637.9940 -43.5030 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs