(Yicai Global) April 22 -- Zhongke Sanhuan High-Tech, a Chinese rare earth permanent magnet maker, will invest in China Southern Rare Earth Group to jointly produce powerful permanent magnets, used in new energy vehicles.

The pair penned a letter of intent under which Zhongke Sanhuan will purchase a 5 percent stake in China Southern Rare Earth, and the two will set up a joint venture to make 5,000 tons high-performance sintered neodymium iron boron magnets each year, the Beijing-based buyer that is affiliated with the Chinese Academy of Sciences said in a statement. 

The plant will be located in China Southern Rare Earth's home town of Ganzhou in Jiangxi province, a major region for mining these critical elements found in car motors. China Southern Rare Earth will hold no more than a 34 percent stake in the JV that will determine the construction schedule according to demand. The initial annual production capacity will not be less than 2,000 tons. China Southern Rare Earth will use its own resources to help the pair select and buy the land. 

The cooperation will guarantee supplies of rare earth raw materials, particularly heavy rare earth elements, which will have a great significance for enhancing the firm's competitiveness in fields such as NEVs, the statement added. 

China Southern Rare Earth is one of the six biggest rare earth groups in China. 

Editor: Emmi Laine