PBOC Says It Adds Short-term Funding to China Money Market
China Rare Earth Stocks Advance on Development Plan
Rare-earth companies in China, the world’s biggest producer, rose in Shanghai and Shenzhen trading after the government announced plans to develop the industry.
Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. rose as much as 8.9 percent to 80.20 yuan, the highest since Nov. 15, in Shanghai, trading at 77.18 yuan as of 10:13 a.m. local time. China Nonferrous Metal Industry’s Foreign Engineering and Construction Co. gained 2.3 percent to 32.48 yuan in Shenzhen. Rising Nonferrous Metals Share Co. surged as much as 8.9 percent to 75.35 yuan in Shanghai, trading at 72.87 yuan at 10:44 a.m.
Premier Wen Jiabao said yesterday China will promote new technology in the industry and accelerate the pace of mergers and acquisitions among rare-earth producers under a five-year plan. The country controls more than 95 percent of the world’s supply of rare earths, a group of 17 chemically similar elements used in hybrid cars, iPods and weapons.
China will take “stricter” measures to control mining of rare earths and lift environmental standards, while continuing to cap production and exports with the quota system, the official Xinhua News Agency reported, citing Wen at a State Council meeting yesterday. China will encourage the development of large rare-earth companies, as well as controlling the scale of mines and boosting management, the China Securities Journal reported yesterday.
Lynas Corp., building a A$550 million ($552 million) rare earths project in Australia, advanced as much as 2.3 percent to A$1.965 today in Sydney, trading at A$1.955 as of 10:35 a.m. Shanghai time. Molycorp Inc., owner of the world’s largest rare- earth deposit outside of China, gained 1.2 percent to $48.87 yesterday in New York Stock Exchange composite trading.
China’s policy of slashing exports of the metals soured ties with major users including the U.S. and Japan, and caused prices to surge.
The government introduced its export quota system for rare earths in 1999. Last July, the country said it would slash exports 72 percent to meet domestic demand and preserve reserves. That was followed in December by a 35 percent cut in quotas to 14,446 tons for the first half of 2011.
--Helen Yuan and Jiang Jianguo. Editors: Alan Soughley, Indranil Ghosh
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