China Minmetals Group Corp has started exploration of heavy rare-earth minerals in Guangdong province and expects to become one of the top three heavy rare-earth companies to consolidate the scattered industry in the south of China, company executive told China Daily on Wednesday.

The State Council said in May that the country aims to let the three biggest companies control 80 percent of heavy rare earths in the south of the country within two years, without specifying the names.

"The government has yet to make the decision. Minmetals is expected to be one of the three conglomerates owing to its scale in the mining and processing sectors," said Assistant President Wang Jionghui , who is also the general manager of Minmetals Exploration & Development Co Ltd.

Wang also said Minmetals has made remarkable progress in gold, rare-earth and tungsten exploration this year.

Minmetals' gold project in Henan province is expected to yield up to 200,000 tons, and work on the mine will start next year, he said.

The company also found a deposit of more than 1 million tons of light-medium rare earths in Hubei province and large reserves of heavy rare earths in Guangdong province.

"Overseas exploration is expected to account for 50 percent of the company's total exploration business in the next five years," Wang said.

The company is involved in the exploration of an iron ore project owned by the Canadian mining company Century Iron Mines Corp (CIMC) in Quebec. Wuhan Iron & Steel Group signed an agreement in February to acquire a stake and jointly develop iron ore projects.

Wang said there is a possibility that Minmetals will also engage in the development of the project.

Industry sources said the three conglomerates might be Minmetals, Aluminum Corporation of China Ltd (Chinalco) and Ganzhou Rare Earth Co Ltd. Chinalco already has rare-earth smelting capacity of 34,700 tons a year of and has rare-earth mining and smelting joint ventures in Guangxi Zhuang autonomous province and the provinces of Jiangxi and Guangdong in southern China.

On June 10, Chinalco took a 45 percent majority stake in a rare-earth joint venture in Jiangsu province.

Ganzhou Rare Earth owns most of the mining licenses for rare earths in Jiangxi province, which is the nation's largest producer of ion-absorbed type rare earths, with verified reserves of 2.89 million tons, accounting for 40 percent of the national total.

Rare earths, a group of 17 elements, are used in a number of high-tech areas, such as wind turbines, missile guidance systems, hybrid car batteries and Apple Inc's iPads.

As the world's largest rare-earth producer and exporter, China has seen reserves depleted and suffered environmental damage. In response, the government has implemented a number of policies to consolidate the scattered rare-earth sector, keep it from being over-exploited and gain more leverage over pricing in the global market.

Unlike light rare-earth minerals, which are dominated by Baotou Steel Rare-Earth Hi-tech Co Ltd in the Inner Mongolia autonomous region, the more expensive heavy rare earths are scattered across a number of provinces and mined by larger producers as well as local small miners.

The provinces of Jiangxi, Fujian, Guangdong, Hunan, and the Guangxi Zhuang autonomous region are known as the five areas in southern China rich in medium-heavy rare earths.