Aluminum Corporation of China Ltd (Chinalco), the nation's largest aluminum producer, will take a controlling stake in the rare-earth subsidiary of the State-owned Guangxi Nonferrous Metals Mining Group.

That's according to the chairman of Guangxi Nonferrous, Li Yangtong, who told China Daily that the companies have signed a preliminary agreement for access to resources in the Guangxi Zhuang autonomous region.

Chinalco, Guangxi Nonferrous and Grirem Advanced Material Co will establish a joint venture to develop rare-earth resources owned by Guangxi Rare Earth Development Co (GRED) - a wholly owned subsidiary of Guangxi Nonferrous Metals Mining Group - which is mainly engaged in rare-earth mining rights and product development.

"Chinalco will hold a 50 percent stake, while Guangxi Nonferrous will obtain 40 percent and Grirem will own the rest," said a company insider who declined to be named.

"GRED has two or three mining rights, through which it can access local rare-earth resources," he said. "The company was suspended from issuing rare-earth export quotas in the first half of this year, but hopefully, after the cooperation with Chinalco, it will regain the quota in the second half of this year. "

Chinese media reported in January that China Nonferrous Metals Mining Group is also planning to explore rare-earth mines in partnership with local operators in Guangxi.

Industry insiders said Chinalco, which has not entered either the rare-earth processing or mining sectors, can gain access to the resources in Guangxi because of strong government backing. The central government has indicated that it wants large companies to lead the consolidation of the country's rare-earth sector.

Rare earths, a group of minerals consisting of 17 elements, are used in a number of high-tech areas, such as wind turbines, missile guidance systems, hybrid-car batteries and products made by Apple Inc.

Large State-owned mining companies are searching for strategic resources to bolster their reserves.

Apart from Guangxi, most medium-heavy rare-earth reserves are located in Jiangxi, Guangdong, Hunan and Fujian provinces.

Guangxi and Guangdong both had production quotas of 2,000 tons for medium-heavy rare earths in 2010, while the quota for Jiangxi was 8,500 tons, according to the Ministry of Land and Resources.

Chinalco is reported to have been in negotiations concerning a potential partnership with Qingyuan, a city in Guangdong province, to develop rare-earth resources.

In March, China Minmetals Corp, the country's largest metals trader, signed an agreement to jointly develop rare-earth resources with Heyuan government in Guangdong province, whose reserves account for 20 percent of the total in southern China

Minmetals will also gain access to rare-earth resources in Ganzhou, Jiangxi province, which is the nation's biggest producer of the ion-absorbed type of the minerals, according to Ganzhou's Mayor Wang Ping.