The list of the six major groups in the rare earth industry was finalized

Two and a half years after the "Several Opinions of the State Council on Promoting the Sustainable and Healthy Development of the Rare Earth Industry", the reorganization of the rare earth industry finally got the exact news. On January 8th, the Ministry of Industry and Information Technology held a special meeting to form a large-scale rare earth enterprise group, stating that the next step should focus on supporting six companies to take the lead in promoting mergers and acquisitions.

However, in the past 2013, the situation of the difficult operation of the rare earth industry has not improved as a whole. Not only has the problem of oversupply not fundamentally changed, but after the first trial of the rare earth litigation in the WTO, the future export policy of China's rare earth has also faced a change.

As of the third quarter of 2013, the profitability of leading companies in Baotou Steel Rare Earth, Guangshao Nonferrous Metals and other industries continued to deteriorate. The fall in the price of rare earth in the fourth quarter will inevitably lead to the failure of companies to surrender their satisfactory performance answers to the capital market.

More roads to integration

At the meeting last week, the Ministry of Industry and Information Technology proposed to focus on supporting Baotou Steel Group, China Minmetals, Chinalco, Guangdong Rare Earth, Luzhou Rare Earth and Xiamen Tungsten Industry, respectively, to take the lead in promoting mergers and acquisitions and restructuring and forming large-scale rare earth enterprise groups. In fact, the industrial integration of the rare earth industry has not been interrupted in the past two years, but the process has not been smooth, and the game between the six major groups and local governments and integrated enterprises has emerged one after another.

Anxin Securities analyst Qi Ding said that from the national situation, the classification of rare earth resources in Inner Mongolia, Shandong, Fujian, Jiangxi, Guangdong and Hunan has been settled, but Sichuan and Yunnan have not yet been determined, and resource competition or renewed waves.

On January 3, the announcement of Baotou Steel Rare Earth showed that the controlling shareholder Baotou Steel Group and the nine rare earth enterprises in Inner Mongolia Autonomous Region signed the “Integration and Restructuring Agreement”, stipulating that Baotou Steel Group will follow the rare earth franchise and related franchise policies. The company is included in the rare earth franchise system. Nine companies and shareholders promised to accept and obey the various management systems of the rare earth franchise operated by Baotou Steel Group. After entering the rare earth franchise sequence of Baotou Steel Group, they strictly followed the national directive plan for production and operation.

Since these nine companies are still difficult to meet the requirements of listed companies in terms of standard operation, financial management, and environmental compliance, the Baosteel Rare Earth will help these nine companies achieve environmental compliance and standardization, and eventually become Baotou Steel Rare Earth Holdings. enterprise.

On the surface, the signing of the “Integration and Restructuring Agreement” is a key step for the merger and reorganization of Baosteel Rare Earth to the rare earth industry in the region, but the actual process is not perfect. As early as the end of December 2012, Baotou Steel Rare Earth and 12 rare earth upstream enterprises signed the “Rare Earth Upstream Enterprise Integration and Restructuring Framework Agreement”. Comparing the two agreements, it can be found that the number of companies involved in restructuring has dropped from 12 to 9. The three companies have quietly disappeared, and Baotou Steel Group has not “hunted” all the targets.

If the main task of Baotou Steel Group and Baotou Steel Rare Earth as the "regular army" is to include "distributed soldiers", then Guangdong rare earths must first "combine" the relationship with listed companies.

Guangdong Rare Earth was established in February 2012. In December of the same year, the Guangdong Provincial Government announced the “Rare Earth Integration Opinion”, proposing to integrate rare earth resources in the province with Guangdong rare earth as the main body. At the same time, from the news transmitted by the Ministry of Industry and Information Technology on January 8th, it is also the responsibility of Guangdong Rare Earth to shoulder the integration of rare earths in Guangdong Province. However, the four legal rare earth mining licenses in Guangdong Province are all in the hands of Guangzhao.

At present, Guangshao Nonferrous and Guangdong Rare Earth belong to the subsidiaries of Guangsheng Asset Management Co., Ltd., and the two parties are affiliated companies. According to the regulations of the CSRC, there is no horizontal competition between the two parties, and eliminating competition in the same industry has become an unavoidable problem.

In order to solve the competitive relationship in the same industry, there are only two ways to go: or the rare earth assets of Guangdong will be injected into the vast and future, and eventually realize the backdoor listing; or the transfer of the rare earth business to Guangdong rare earth, Become a non-rare earth business listed company.

A vast and colorful rare earth in Guangdong is inevitable regardless of the outcome.

Yield compression is especially critical

At the same time as the merger and reorganization of the domestic rare earth industry, the price of rare earths is still weak, the performance of the industry is declining, and the stock prices of listed companies are falling. In 2013, the annual share prices of Baotou Steel Rare Earth, Xiamen Tungsten and Guangsheng Nonferrous were 40.1%, 37.81% and 33.57% respectively.

According to the data provided by the business community, the price of most of the major rare earth products in the market declined in 2013, with lanthanum oxide and antimony oxide falling the most, reaching 28.57% and 26.19% respectively, and the price of strontium iron alloy and metal bismuth. They also fell by 23.40% and 10.99% respectively, and the prices of these products fell by more than 75% compared to the highest prices in 2011.

At the same time, the performance of various listed companies also went from bad to worse. The net profit of Baotou Steel Rare Earth in the first three quarters of 2013 was 1.324 billion yuan, a decrease of 21.61% year-on-year; Guangzhao Nonferrous Metals had a loss of 34.473 million yuan, while the net in the same period of 2012 The profit reached 37.574 million yuan.

In fact, since June 2013, with the strengthening of the management of rare earth illegal mining, smelting and sales in the south, the price of rare earth has rebounded sharply in the third quarter, but the price of rare earth has entered again after entering the fourth quarter. Bear market, so the annual performance of the companies in the sector is also not optimistic.

In order to avoid the deficit in the annual report, some listed companies have played the trick of connected transactions. At the end of 2013, the most unsatisfactory performance in the first three quarters sold the 285 million yuan worth of rare earth oxides to related companies with a view to returning funds and improving performance.

Liu Ruixing, an analyst with the rare earth industry of the business community, believes that the supply of rare earths exceeds demand, which directly leads to weak prices. If the supply of rare earths can be controlled from the source, it will help the price of rare earths, but no company intends to take the initiative. Give up the market.

In addition, due to the WTO's preliminary ruling on China's existing rare earth export quota policy, rare earth export tariffs and other restrictions on policy violations, it means that the existing rare earth export control may end. From 2015, China's rare earth export policy may be adjusted, and export quotas will be changed to export licenses, and tariffs will be cancelled. Therefore, under the pressure of losing the WTO, it is more urgent to implement the integration of large groups. There may be more policy rules introduced this year.

The six major groups will continue their merger and reorganization plans this year, and the competition for mine resources and increased production quotas will not stop.

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