Chinese rare earths producer Shenghe Resources Holding Co is set to lose tens of millions of dollars after reporting that “once-in-a-century”flooding in southwest Sichuan province had shut down plants and damaged inventory.
Floods on China’s Yangtze river, which passes through Sichuan, forced authorities to evacuate more than 100,000 people on Tuesday.
Shenghe subsidiary Leshan Shenghe and Sichuan Runhe Catalytic New Material Co, in which it holds a 38.1% stake, were affected by the flooding, Shenghe said in a Wednesday filing to the Shanghai Stock Exchange.
“The water level … is quite deep. At the moment the factories have completely stopped production and all personnel have been evacuated safely,” the statement said.
Shenghe added in a follow-up statement there were no casualties and nor did any dangerous material leak. The rare earths production process can have a radioactive byproduct.
Shares of Shenghe fell 10 percent on Wednesday.
China is the world’s dominant producer of rare earths, a group of 17 minerals used in consumer electronics and military equipment.
Leshan Shenghe, which processes rare earths into material usable by manufacturers, is expected to lose 240 million-330 million yuan ($35 million-$48 million) due to the flooding, including 220 million-280 million yuan in inventory, the filing said.
That exceeds the 83.8 million yuan Shenghe said in a separate filing that the unit’s inventory was insured up to. Leshan Shenghe produced more than 28,000 tonnes of rare earth salts in 2019.
Shenghe, which also has a minority stake in U.S. rare earths miner MP Materials, said the plants would work to resume production under local government guidance, without giving a time frame.
Shenghe distributes rare earth concentrate from MP Materials’ California mine to Chinese refiners. It was not immediately clear if the flooding had affected that distribution operation. MP Materials declined to give official comment.
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