It is reported that Baotou Steel Rare Earth (Group) Hi Tech Co, the world's largest rare earth producer, will consolidate 35 local rare earth miners by June 2011 and will further unify the distribution and processing of the metals.

The Inner Mongolia autonomous region, the world's largest rare earth producer and the site of 97% of China's reserves, has drafted a plan to concentrate all rare earth resources under Baotou Steel Rare Earth.

The 22 separation companies licensed by lower municipal governments in the region will be shut down and receive compensation from Baotou Steel Rare Earth. The remaining nine, which are unlicensed, will be closed without compensation.

Baotou Steel Rare Earth will also acquire four rare earth separation companies licensed by the autonomous region's government.

The move follows the announcement last week that Baotou Steel Rare Earth will set up Baotou Rare Earth Products Exchange to further regulates the market.

It will be the country's first rare earth products exchange and will trade only spot products, excluding futures. This initiative is part of the government's effort to consolidate the nation's scattered rare earth sector, gain more influence over pricing in the global market and pave the way for sustainable growth in the industry.

Rare earth metals, 17 elements used to manufacture such products as wind turbines, hybrid cars, missile guidance systems and mobile phones, are broadly separated into light and heavy varieties.

Much larger reserves of light rare earth metals have been discovered in the Inner Mongolia autonomous region, while heavy rare earths are mostly scattered in South China and are more expensive.

The Ministry of Land and Resources said that 15 southern Chinese cities with abundant heavy rare earth resources have signed agreements to cooperate in regulatory enforcement.

During the annual national legislative meeting in March 2011, Mr Hu Ercha deputy head of the standing committee of the autonomous region's people's congress said that Baotou Steel Rare Earth, the country's largest light rare earth producer, will further consolidate companies from Fujian and Jiangxi provinces, which are rich in heavy rare earth metals.

The State Council said on May 19th 2011 that it is planning to consolidate the rare earth sector by allowing the biggest domestic players to dominate the industry within two years, the first time that the Chinese government has publicly said it will let the biggest companies lead the industry.

The government's paper came after an announcement in February that it will impose more stringent mining policies and environmental standards for the minerals in tandem with the establishment of reasonable production and export quotas.

(Sourced from China Daily)