Rare Earth Exchanges

Rare Earth Element State-backed Enterprise Solidifies Arrangement with People’s Bank of China to Fund Green Transformation, Decarbonization Initiatives

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Highlights

  • Baosteel Finance Company successfully applied to submit green loan special statistical data to the People’s Bank of China.
  • Submission starts on January 1, 2025.
  • The company aims to support green and low-carbon enterprise development through innovative financial service models.
  • As part of Baogang Group, the finance company is contributing to China’s decarbonization efforts and Paris Agreement commitments.

Baosteel Finance Company, part of the Baogang Group (opens in a new tab) declares its success in achieving a breakthrough in green bill business. Also known as Baotou Iron and Steel Group, or Baotou Steel (opens in a new tab), the firm was reorganized in 1998 from Baotou Iron and Steel Company established in 1954. It is the largest steel enterprise in Inner Mongolia. It has a large production base of iron and steel and the largest scientific research and production base of rare earths in China. Rare Earth Exchanges tracks practical various trends in China’s rare earth element (REE) complex.

Background

China is part of the Paris Agreement and thus has developed a series of decarbonization efforts.

Yes, China's decarbonization policies are part of the Paris Agreement: 

In 2016, China submitted its NDC to the Paris Agreement, committing to peak carbon emissions by 2030 and achieve carbon neutrality by 2060.  Some key targets include the following:

China's NDC includes targets to:

  • Reduce carbon dioxide emissions per unit of GDP by over 65% from 2005 levels 

  • Increase the share of non-fossil fuels in primary energy consumption to around 25% by 2030

Increase installedcapacity of wind and solar power to over 1,200 GW by 2030 

  • Increase forest stock by 6 billion cubic meters from 2005 levels

With the incoming Trump administration in the USA, it will be interesting to observe how policy changes associated with global warming (e.g. denying the science, etc.) could impact the rare earth industry.

Funding the Away in the Firm

Recently, Baosteel Finance Company (opens in a new tab), part of the Baogang Gorup, announced the successful application to submit green loan special statistical data to the Baotou Branch of the People's Bank of China.

As part of an ongoing move for China to demonstrate its commitment to decarbonization, from January 1, 2025, the finance company can start data submission, marking a new breakthrough in the green bill business.  Meaning the large vertically integrated company seeks to provide the financial vehicles to fund so-called green business units or improve the carbon footprint record across various operations.

The People's Bank of China (opens in a new tab) (PBOC) is owned by the State of China. The PBOC is China's central bank and is responsible for issuing currency, formulating monetary policy, and safeguarding financial stability. 

For background context, the PBOC took over the role of China's central bank in 1950, replacing the Central Bank of China. The PBOC gradually took over private banks and has exclusive authority to issue currency.

It is understood that after the successful approval, the finance company will be able to handle green discounts, green loans, and other related businesses for the relevant member units of the group company, and the feasibility of obtaining relevant policy support will be greatly improved.  Meaning the finance company has the backing of the government to make loas, and the like.

According to the Baogang Group media entry, to achieve the goal of approval for the submission of special statistical data on green loans, since 2023, the finance company has taken the financial business of peer institutions as a benchmark, actively carried out exchanges and learning, and at the same time, increased the intensity of research and visits to the member units of the group company.

Under the guidance of the Baotou Branch of the People's Bank of China, again a local unit of the state-owned national bank, the finance company clarified the requirements for the submission of special statistical data on green loans, and applied for the submission of special statistical data on green loans for the bill discount business of Baosteel Rolling Company that meets the relevant requirements, and "green label" the company's bill business, thereby helping the member units of the group company to develop in the direction of green and low-carbon enterprises.

In the next step, the financial company will continue touphold the core purpose of "relying on the group and serving the group", do a good job in green financial services, find the right service direction, expand the service scope, continuously innovate financial service models, enhance financial service support for member units in key areas, promote the development of green industries in the group company, and contribute to the high-quality development of the group company with practical actions.

Importantly Baogang Group, also known as Baotou Iron and Steel Group, Baotou Steel  is an iron and steel state-owned enterprise in Baotou, Inner Mongolia, China.  The group has ownership in other rare earth ventures such as China Northern Rare Earth (Group) High-Tech Co., Ltd. (SHSE:600111).

The firm was reorganized in 1998 from Baotou Iron and Steel Company established in 1954. It is the largest steel enterprise in Inner Mongolia. It has a large production base of iron and steel and the largest scientific research and production base of rare earths in China.

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