I am refering to the many small producers beside Baotou. Many have been bought by Baotou & Ganzhou but there are still many more that will go bust without Govt funding.
The facts are China RE industry restructure will control exports and prevent RE prices from dropping further.
Baotou recent profit drop in spite of higher RE prices in 2012 shows that Baotou is not a low cost producer of RE.
Read the reports shown below...
***Rare-earth producer sees sharp drop in profit***
Baotou Steel Rare-Earth (Group) Hi-Tech, the country's largest rare-earth producer, saw a sharp drop in net profit and revenue in 2012 due to falling demand and a slowing economy. Net profit fell 56 percent year-on-year to 1.51 billion yuan ($240 million) last year. Revenue fell 19 percent to 9.24 billion yuan as a result of continuous low demand in the rare-earth market and a drop in prices. The company is planning on revenue of 7.5 billion yuan in 2013.
***Chinese rare earth firm to form mega company***
BEIJING - China's top rare earth producer announced Friday it will gain control of 12 other firms in the sector, making its first move to form a mega company.
Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co on Thursday signed framework agreements on consolidating and restructuring with other rare earth firms based in Inner Mongolia, the REHT said in a statement filed to the Shanghai Stock Exchange.
Under the agreements, the 12 firms and their shareholders will transfer 51 percent of the companies' combined equity to REHT for free while REHT will plan their management and production.
REHT will also provide the firms with support in terms of talent, technology, funding, production and export quotas.
REHT's light rare earth output accounts for more than half of the world's total.
The move is the company's first step in its ambition to create a massive rare earth enterprise that will integrate light rare earth resources in the country's northern region, a plan that was unveiled in August this year.
The industry consolidation is also part of efforts to control environmental damage caused in rare earth mining and processing, stave off resource depletion and nurture competitive domestic firms in the sector.
Authorities expect bigger enterprises to churn out products with higher added value and shoulder more responsibility in environmental protection.
A major rare earth production corporation has been formed in east China's Jiangxi province as part of efforts to boost the industry's sustainable development.
The state-owned Ganzhou Rare Earth Group Co, Ltd, based in the city of Ganzhou, was founded through the merging of its key subsidiary Ganzhou Rare Earth Mineral Industry Co, Ltd and some local rare earth companies, including Longnan Wanbao Rare Earth Co.
Thirty-six percent of China's middle and heavy rare earth reserves are in Ganzhou, which has experienced overexploitation since the end of the 1970s.
"From now on, Ganzhou will step up efforts to facilitate the merging and restructuring of the rare earth industry," said Liu Jianping, vice-mayor of Ganzhou.
As the only prospector in Ganzhou,the group will be involved in rare earth mining, smelting, processing and trade.
In 2012, the sales revenues of the rare earth industry in Ganzhou reached 34 billion yuan (about $5.44 billion), acccounting for one-third of the industry's revenues nationwide, according to Ma Rongzhang, secretary-general of the China Rare Earth Industry Association.
...However, the country holds only 23 percent of the world's rare earth reserves. Decades of excessive exploitation have greatly damaged the environment. The government will slash the number of rare earth firms through mergers and concentrate production capacity...
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