Rare-earth materials are smelted at the Fortune Electronic Company in Ganzhou. Photo: Li Hao/Global Times

China on Thursday officially set up the China Rare Earth Group Co, an industrial conglomerate through merging several key producers of the important mineral resources, China's national assets regulator said.

The move was praised by industry experts as showing China's determination not to squander rare earths anymore and instead use the minerals more in strategic industries such as semiconductors and electric cars. 

The State-owned Assets Supervision and Administration Commission (SASAC) confirmed in a statement published on Thursday that the China Rare Earth Group Co was set up with permission from China's State Council, the cabinet. The SASAC will fulfill the responsibility of promoter on behalf of the State Council. 

The group was formed through merging rare-earth units of state-owned companies including China Minmetals Corp, Aluminum Corp of China (CHALCO) and Ganzhou Rare Earth Group Co, according to a stock exchange filing by China Minmetals Rare Earth Co, a subsidiary of China Minmetals Corp. 

The SASAC has a controlling 31.21 percent stake in the new company, while China Minmetals Corp, CHALCO and the Ganzhou Rare Earth Group Co each hold 20.33 percent of the new entity, China's state broadcaster China Central Television reported. 

The news sent the share prices of two companies, CHALCO and its subsidiary Jiaozuo Wanfang, up by the daily limit of 10 percent. Rare-earth permanent magnet shares closed 0.36 percent higher. 

Zhang Anwen, vice secretary-general of the Chinese Society of Rare Earths, told the Global Times that the merging of rare-earth assets is focused on medium and heavy rare-earth companies in southern China, and is participated by multiple companies ranging from resource smelting and separation and processing.

Medium and heavy rare earths are used to make a large number of products ranging from telescopes to colored lenses. 

China's move to create the China Rare Earth Group Co, following rounds of regional mergers, shows the government's determination to put these resources to the best use instead of squandering them, as certain companies did in the past, before the government stepped in to regulate the industry, experts said. 

"There was a time when Chinese companies only took short-term economic interests into account when doing rare-earth business, which led them to sell these minerals rather cheaply, but after years of development, China must value the resources for use in industry, instead of leaking them in an unregulated manner," Liu Enqiao, a senior analyst at Beijing-based Anbound Consulting, told the Global Times on Thursday. 

According to Liu, rare earths should be used more in industries that involve national initiatives such as new-energy vehicles and carbon reductions. 

Zhang stressed that setting up the China Rare Earth Group Co would enhance the resource utilization rate of China's medium and heavy rare-earth assets, which also aids environmental protection and restoration. 

However, Zhang said that although the merging would help stabilize market prices and prevent the problem of low-price dumping from emerging again in China, it would not cause China's rare earths prices to fluctuate wildly.

"Rare-earth prices are dependent upon many factors such as market demands and supplies, and setup of the new company does not mean the government would directly intervene in the resources' prices," he said.