Xiamen Tungsten Co. rose to the highest in more than a month in Shanghai after the company said it will accelerate development of its rare earth business.
The stock jumped by the 10 percent daily limit to 46.06 yuan, the highest close since June 20. China’s benchmark Shanghai Composite Index added 0.2 percent.
The southeastern province of Fujian asked the company to take a leading role in helping to promote development of the region’s rare earth industry, Xiamen Tungsten said in a statement to Shanghai’s stock exchange late yesterday. Fujian wants to consolidate the industry by the end of this year and to foster a rare-earth company with 20 billion yuan ($3.1 billion) of output by 2015, the company said.
The company, based in the city of Xiamen located in Fujian, also rose by the 10 percent daily limit on Aug. 6, after the Shanghai Securities News reported the province had asked it to take a leading role in the rare earth industry. The shares were suspended yesterday before its announcement.
“The company has enormous room for growth,” as rare earth accounted for about 15 percent of Xiamen Tungsten’s revenue last year, Xiao Shijun, a Beijing-based analyst at Guodu Securities Co., said in an Aug. 6 note.
China, supplier of 90 percent of the world’s rare earth minerals, plans to close about a fifth of its existing production capacity under new industry rules, China National Radio reported Aug. 6.
The nation has cut mining rights for rare earths as average prices of the minerals used in car electronics, laptops and headphones tumbled by more than half from 2011’s record levels as users reduced purchases or sought alternative sources.
The province of Guangdong also said on May 31 it’s planning to complete the consolidation of its rare earth industry through mergers and joint ventures by 2013. Guangdong will ban the construction of new rare earth projects and the expansion of production capacity in the province, according to the government’s statement.
Fujian won’t offer rare earth mining and control quotas for mining-right owners that don’t proceed with or complete consolidation by the end of 2012, Xiamen Tungsten said.