Rare Earth producer Shenghe Resources to recover from Sichuan flood

China rare earth producer Shenghe Resources, which has survived the Sichuan flood, issued an update on its losses yesterday.

The Group’s subsidiary Leshan Shenghe Rare Earth and Rezel Catalysis, which are located at Wutongqiao District of Leshan City, were hit by the catastrophic flood on August 18.

According to an official statement by Shenghe Resources, the two factories immediately executed the emergency flood prevention plan and disaster relief work after receiving the flood warning from the local government. The flood gradually receded at about 1:00 a.m. on August 19. There were no casualties no leakage from hazardous goods were reported.

The affected factories will resume operations under the guidance of the local government. Leshan Shenghe has contacted the insurance company for loss determination and compensation, while Rezel Catalysis did not cover property insurance.

It was reported that Leshan Shenghe has insured property all risks insurance, totalling 275,680,142.01 yuan, with 83,755,794.67 yuan for inventories, 111,638,619.92 yuan for equipment and workshops and 80,285,727.42 yuan for semi-finished products.

As the losses are still being calculated, Shenghe Resources will keep a watchful eye on the progress and fulfill the obligation of information disclosure in time.

Leshan Shenghe is mainly engaged in smelting and separation of light rare earth. It produced 28,226.97 mt of rare earth salts and 7,778.98 mt of rare earth oxide in 2019, and sold 12,893.38 mt and 4,542.58 mt respectively, generating 544.07 million yuan of revenues which accounted for 7.82% of the company’s total operating income. 

On the other hand, Rezel Catalysis is mainly engaged in producing rare earth catalytic materials. In 2019, it produced 20,748.67 mt of catalyst and molecular sieve, and sold 15,485.68 mt, generating 261,520,900 yuan of revenues, accounting for 3.76% of the company's operating income.