Highlights

• Li Xiao leads Baosteel delegation to explore technological partnerships in intelligent manufacturing and rare earth research
• Discussions with Supcon Technology focus on AI capabilities and digital transformation strategies
• Strategic move aims to enhance core competitiveness and align with national technological development goals

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On December 2, 2024, Li Xiao, Deputy Secretary of the Party Committee and General Manager of Baosteel Group Corporation, led a delegation to Hangzhou, capital of Zhejiang, China to visit Supcon Technology Co., Ltd (opens in a new tab). and the Hangzhou Branch of the Baotou Rare Earth Research Institute. The purpose of these visits was to explore collaborations aimed at enhancing Baosteel's capabilities in intelligent manufacturing and rare earth research.  Of course, of importance for the Western audience is the fact that the Chinese rare earth element is under intense pressure from top down to transcend current productive capacity and capability.

The meeting with Supcon Technology undoubtedly is to take advantage of the company’s breakthroughs based on our assessment of the company’s latest media release (opens in a new tab).

What is Supcon Technology?

Established 1999, SUPCON Technology Co., Ltd. (SUPCON, 688777.SH, SUPCON.SW) has been a leading global provider of overall solutions for intelligent manufacturing. Leveraging the integration of advanced products and extensive industry know-how, the company is committed to promoting the breakthrough and innovation of AI technology. With robust R&D and cutting-edge AI, we serve more than 30,000 customers across over 50 countries, empowering businesses across key industries like chemical, petrochemical, oil & gas, power, petrochemical, chemical, metallurgy, building materials, pulp & paper, new materials, new energy, food & beverage, etc.

Key Points of the Visti to Supcon Technology

• Supcon Technology is a leading provider of intelligent manufacturing solutions, focusing on "AI data" capabilities.
• Li Xiao engaged in discussions with Chu Jian, founder of Supcon Technology, to understand the company's innovations in intelligent manufacturing, digital transformation, and industrial AI.
• The two parties expressed intentions to explore potential collaborations, including feasibility tests of key technologies and pilot applications in critical scenarios, aiming to enhance enterprise benefits and develop new quality productivity.

Investigation of Hangzhou Branch

• The Hangzhou Branch serves as an innovation hub for the rare earth sector.
• Li Xiao chaired a symposium to review the branch's progress, addressing challenges in construction, development, and research.
• He emphasized the need to improve incentive mechanisms for transforming scientific and technological achievements, such as project income dividends and stock options, to boost innovation among scientific personnel.
• The goal is to position the Hangzhou Branch as a source of original technology, contributing to the development of "two rare earth bases" and promoting high-quality company growth.

What are some key assumptions involved with this announcement?

First and foremost, as Rare Earth Exchanges has educated China’s rare earth complex companies, such as Baogang Group (Baosteel) is to align with China’s national strategies, such as the "Made in China 2025" initiative, which emphasizes intelligent manufacturing and technological innovation.  We emphasize growing talent shortage and the need to disrupt the value chain with technology and process disruption.

By focusing on AI and rare earth research, Baosteel aims to strengthen its position in high-tech industries, supporting national goals of technological self-reliance and industrial upgrading.

Enhancing Core Competitiveness

With imminent moves by Western governments to decentralize rare earth process capability and capacity, Chinese companies must be ready for the next wave of price war, where prices go even lower, putting Western firms in precarious situations.  Remember Chinese firms are state-owned.   The companies such as Baosteel must collaborate with leading technology firms and research institutes to bolster core competitiveness in the global market.

The emphasis on intelligent manufacturing and rare earth applications suggests a strategic move to diversify and innovate beyond traditional steel manufacturing.

Addressing Talent and Innovation Challenges:

The focus on improving incentive mechanisms indicates an acknowledgment of existing challenges in attracting and retaining innovative talent.

By proposing mechanisms like income dividends and stock options, Baosteel aims to foster a more dynamic and motivated research environment.

Potential Biases:

The press release today highlights Baosteel's proactive steps in innovation and collaboration, which may serve to enhance its corporate image and appeal to stakeholders.

The emphasis on alignment with national policies and contributions to high-quality development may reflect a desire to position the company favorably within government and industry circles. In Communist China in such a strategic industry this is a must.

Selective Disclosure:

The release focuses on potential collaborations and strategic intentions without providing specific details on agreements or measurable outcomes.

This selective disclosure may present an optimistic view of future prospects without addressing potential risks or challenges.

Rare Earth Exchanges Takeaway

In summary, Baosteel's visits to Supcon Technology and the Hangzhou Branch of the Baotou Rare Earth Research Institute underscore its commitment to intelligent manufacturing and rare earth research. While these initiatives align with national strategies and aim to enhance competitiveness, the press release may exhibit biases toward corporate self-promotion and selective disclosure of key information.