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

The announcement had an immediate effect on the market, with the cost of most REEs defying analysts' predictions with steep price increases; dysprosium, for example, doubled in value. However, this rally proved to be short-lived, and prices plummeted back down in 2012.

Though the plan has been in the making for years, the timing of Baotou Steel Rare-Earth's most recent move was a curveball as it came straight after the company's announcement that it will continue production halts at its factories for a third consecutive month in an effort to stabilize slumping market prices.

Plan outline

Details of the latest plan suggest there are 35 rare earth miners and processors involved in the framework. Baotou Steel Rare-Earth will be in charge of mining, selection of mine locations, processing, management and separation, according to China Daily. In April last year, the organization offered subsidies to 22 upper-stream rare earth companies that had closed as a result of struggling market conditions. It also opened up an integration process to another 13 enterprises.

The China Daily article states that the final list of companies to be integrated includes Baotou Jinmeng Rare Earth, Baotou Xinyuan Rare Earth Hi-tech and New Material and Baotou Xinye New Material.

When the integration is complete, Baotou Steel will be responsible for marketing and sales strategy, as well as the industry and product layout of all parties concerned. For now, it will support the 12 parties in areas relating to production and export quotas.

Only the beginning

Investors will be watching the effects of this scheme with much interest, especially considering comments made last year by Baotou Steel's general manager, Zhang Zhong.

Zhong said that if this initial stage is successful, Baotou Steel will also expand and will eventually team up with major rare earth producers in the provinces of Gansu, Sichuan and Shandong, according to China Daily.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

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