China Northern Rare Earth: Recent orders have maintained a stable trend, with the overall situation better than expected. We are optimistic about the future trend of rare earth prices.

The investor relations activity record sheet announced by China Northern Rare Earth on June 24 showed:

Q: How is the recent demand for the company's orders?

China Northern Rare Earth responded: The company's recent orders have maintained a stable trend, with the overall situation better than expected.

Q: What is the company's planning for the magnetic material sector?

China Northern Rare Earth responded: In terms of magnetic alloy, the company currently has a magnetic material alloy production capacity of 100,000 mt/year. To further enhance industrial competitiveness, the company's subsidiary, Inner Mongolia Northern Rare Earth Magnetic Material Co., Ltd. (hereinafter referred to as Northern Magnetic Material), has initiated the construction of a 50,000 mt/year high-performance NdFeB strip casting alloy project. After the project is completed, it will add an annual production capacity of 50,000 mt of magnetic material alloy and 10,000 mt of hydrogen decrepitation powder, creating a rare earth magnetic material alloy (powder) production factory with the largest single-unit capacity, the most optimal comprehensive cost-effectiveness, leading quality, and the most competitive market position.

In terms of magnets, the company is accelerating capacity construction and technological upgrades. It has jointly established Antai Northern Technology Co., Ltd. with Advanced Technology & Materials Co., Ltd. and its subsidiary Northern Magnetic Material, which has completed the construction of a 5,000 mt/year rare earth permanent magnet industrialisation project. It has also jointly invested with Ningbo Zhaobao Magnetic Industry, Suzhou Tongrun Drive, and Ningbo Xici Technology to establish Northern Zhaobao Magnetic Industry (Inner Mongolia) Co., Ltd., implementing a 3,000 mt/year high-performance NdFeB magnetic material project to further meet the magnetic material demands in high-end permanent magnet motors, robots, intelligent equipment, and other fields.

In the future, the company will extend, supplement, and strengthen its industrial chain through mergers and acquisitions, transforming resource advantages into coordinated upstream and downstream industrial development advantages, enhancing magnetic material production capacity and technological levels, strengthening rare earth metal resource security capabilities, comprehensively enhancing the market competitiveness of magnetic material products and the value creation of the industry chain, and providing core material support for emerging industries such as new energy, intelligent manufacturing, and artificial intelligence. At the same time, it will fully leverage changes in the magnetic material market, optimize product structures, increase product market share, and maximize benefits.

Q: How does the company view China's leading position in the rare earth industry currently?

China Northern Rare Earth responded: China's rare earth industry holds a significant leading position globally, mainly reflected in the following aspects: First, abundant reserves. China is the country with the most abundant rare earth resources globally, accounting for approximately 40% of the world's total reserves. Second, advanced processing technology. China leads the world in rare earth smelting and separation and other processing technologies, with rare earth smelting and separation capacity accounting for over 90% of the global total. Third, a complete industry chain. China's rare earth industry chain covers mining, beneficiation, smelting, separation, processing, and other links, and has also formed technological advantages in high-value-added products such as rare earth permanent magnet materials. Fourth, extensive applications. China is not only a rare earth supplier but also an important rare earth consumer. Domestic rare earth products are widely used in numerous fields such as NEVs, green wind power, consumer electronics, robots, military industry, and medical care, providing important support for the development of China's rare earth industry.

Q: This year's total rare earth production control indicators have not yet been issued. How does the company organize production?

China Northern Rare Earth responded: Judging from the total rare earth mining and smelting and separation production control indicators issued by the state in previous years, the basic principle is to meet the supply-demand balance of the rare earth industry and promote its healthy development. This year's total rare earth production control indicators have not yet been issued. The company organizes production according to its annual production plan to meet the raw material demands of downstream rare earth applications.

Q: What is the company's view on the subsequent total rare earth production control indicators? Will there be any new changes this year?

China Northern Rare Earth responded: In November 2023, the State Council Executive Meeting studied work related to promoting the high-quality development of the rare earth industry. The meeting pointed out that rare earths are strategic mineral resources. It is necessary to coordinate rare earth resource exploration, development, utilization, and standardized management, coordinate the forces of industry, academia, research, and application, actively promote the research, development, and application of new-generation green and efficient mining, beneficiation, smelting, and separation technologies, increase efforts in the research and industrialisation of high-end rare earth new materials, severely crack down on illegal mining, ecological destruction, and other behaviors, and focus on promoting the high-end, intelligent, and green development of the rare earth industry. In October 2024, the state promulgated the "Rare Earth Management Regulations," with Article 10 clearly stipulating: "The state implements total volume control over rare earth mining and rare earth smelting and separation and optimizes dynamic management based on factors such as rare earth resource reserves and types, industrial development, ecological protection, and market demand." As an important strategic resource, the mining and smelting and separation of rare earths are subject to state control. The state will comprehensively consider factors such as rare earth resource reserves and types, industrial development, international situations, and other aspects stipulated in the "Regulations" when issuing indicators, listen to the opinions and suggestions of relevant parties, and formulate scientific and reasonable total volume control indicators. On February 19, 2025, the MIIT issued the "Public Consultation on the 'Administrative Measures for Total Volume Control of Rare Earth Mining and Rare Earth Smelting and Separation (Provisional) (Public Consultation Draft)' and the 'Administrative Measures for Information Traceability of Rare Earth Products (Provisional) (Public Consultation Draft)'," which will guide how the subsequent industry implements the "Rare Earth Management Regulations," but the specific situation still needs to wait for the MIIT to officially issue relevant detailed rules.

Q: What is the progress of the company's green smelting upgrade and transformation project?

China Northern Rare Earth responded: As the world's largest and most complete rare earth smelting and separation project, the company's green smelting upgrade and transformation project is a key project implemented around the company's industrial planning and to achieve the goal of supporting the high-quality development of enterprises. It is also an important supporting project for the construction of the "two rare earth bases." The construction content includes the main process engineering (roasting, leaching, extraction, precipitation, and calcination processes), comprehensive resource utilization engineering, public auxiliary facilities, and general layout transportation engineering, among others.

The project is advancing in an orderly manner according to the overall goals and staged tasks, with overall smooth progress. Phase I of the project entered the debugging, operation, and trial production stage in October 2024. Phase II is currently undergoing detailed design, equipment selection, as well as civil engineering, equipment procurement, and other work, and is planned to commence construction in the second half of 2025. Through precise scheduling and collaboration, all aspects of the project are advancing as planned, and the overall progress is in line with expectations.

The green smelting upgrade and transformation project will create an entire set of automated production lines for rare earth smelting, adopt various intelligent equipment systems, enhance the intelligent level of green rare earth smelting equipment, and achieve intelligent production with high quality, efficiency, low consumption, and flexibility. The project will ignite a trend of the rare earth industry moving towards newness, greenness, and high-endness, adding new vitality and injecting new momentum for the company to become a world-class rare earth leader and serve as the main force in the construction of the "two rare earth bases."

Q: What is the progress of the company's joint venture with Fujian Golden Dragon Rare-Earth Co., Ltd. to establish a new company?

China Northern Rare Earth responded: The joint venture to establish the new company has recently passed the anti-monopoly review for concentration of undertakings by the State Administration for Market Regulation and is currently going through the industrial and commercial registration procedures.

Q: What is the medium-heavy rare earth reserve in the Bayan Obo mine? What is the company's planning for medium-heavy rare earths?

China Northern Rare Earth responded: According to the rare earth element distribution in the Bayan Obo rare earth mine, light rare earth elements account for approximately 98%, and medium-heavy rare earth elements account for approximately 2%. Based on this and the total reserves of Bayan Obo rare earth resources, the total amount of medium-heavy rare earths in the Bayan Obo mine is estimated to be several hundred thousand tons. The company's subsidiary, Baotou Jingrui New Materials Co., Ltd., is engaged in the processing and production of medium-heavy rare earths. The company conducts toll processing production of samarium-europium-gadolinium-enriched substances and currently has a production capacity of approximately 2,100 tons of rare earth oxide equivalents.

Q: What is the company's expectation for future rare earth prices?

China Northern Rare Earth responded:Since the first quarter of 2025, influenced by policies such as the tightening of upstream raw material supply and downstream consumption stimulation, the overall activity of the rare earth market has been better than that of the same period last year, which has also supported the company's performance in the first quarter. The company has seized the favorable market opportunities, comprehensively improved production line operating efficiency around the annual production and operation task goals, continuously optimized raw material and product structures, expanded markets in multiple ways, deepened reforms, and achieved record-high production and sales volumes. After entering April-May, influenced by the international environment, rare earth prices experienced a brief pullback. However, with the gradual clarification of national policies, the attention to the rare earth industry has also risen, driving up product prices. Currently, the orders of the company's subsidiary, Inner Mongolia Northern Rare Earth Magnetic Material Co., Ltd., are relatively full, and the company holds an optimistic view of the future trend of rare earth prices.

The first quarter report of 2025 released by China Northern Rare Earth showed: The company achieved a revenue of 9.287 billion yuan in the first quarter, up 61.19% YoY; a net profit attributable to shareholders of publicly listed firms of 431 million yuan, up 727.3% YoY; and a net profit attributable to shareholders of publicly listed firms after deducting non-recurring gains and losses of 435 million yuan, up 11,622.98% YoY.

Regarding the reasons for the increase in revenue, China Northern Rare Earth stated: In the first quarter, the average prices of the company's main rare earth products represented by Pr-Nd products increased YoY, and sales volumes increased YoY. Regarding the reasons for the increase in net profit, China Northern Rare Earth stated: In the first quarter, the average prices of the company's main rare earth products represented by Pr-Nd products increased YoY, raw material costs decreased YoY, and gross profits increased YoY.

The 2024 annual report of China Northern Rare Earth showed: In 2024, the company achieved a total operating revenue of 32.966 billion yuan, down 1.58% YoY; a net profit attributable to shareholders of publicly listed firms of 1.004 billion yuan, down 57.64% YoY. Reasons for the change in operating revenue: In 2024, the prices of the company's main rare earth products represented by Pr-Nd products continued to fluctuate downward since the beginning of the year, and the annual average prices decreased YoY.

As China Northern Rare Earth stated when accepting institutional surveys: Since the first quarter of 2025, influenced by policies such as the tightening of upstream raw material supply and downstream consumption stimulation, the overall activity of the rare earth market has been better than that of the same period last year, which has also supported the company's performance in the first quarter. Reviewing the price trend of SMM Pr-Nd oxide in the first quarter, it can be seen that the average price of Pr-Nd oxide on March 31 this year was 444,500 yuan/mt, compared with the average price of 398,000 yuan/mt on December 31, 2024, an increase of 46,500 yuan/mt, with a first-quarter increase of 11.68%. Comparing the daily average price of Pr-Nd oxide in the first quarter of 2025 (429,605.26 yuan/mt) with that in the first quarter of 2024 (381,646.55 yuan/mt), it can be seen that the daily average price in the first quarter of this year increased 12.57% YoY.

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According to SMM quotes, the average price of Pr-Nd oxide on June 26 was 445,000 yuan/mt, unchanged from the previous trading day. Similar to Pr-Nd oxide, the prices of rare earth raw materials this week have generally shown a relatively stable trend. Supply side: Influenced by the rainy season in Southeast Asia, the quantity of ion-adsorption ore imported from the region in June has significantly decreased. With the contraction of supply, the willingness of most mining enterprises to sell at low prices has weakened, and low-priced goods on the market have become increasingly scarce. Separation plants, facing difficulties in raw material procurement, have also shown a reluctance to sell products at low prices. Current market feedback indicates that the industry has a strong wait-and-see sentiment, and the purchasing enthusiasm of downstream buyers is generally not high.

As downstream industries gradually emerge from the traditional off-season, coupled with frequent positive market news, most industry insiders hold optimistic expectations for the future prices of rare earths. Under this market atmosphere, low-priced goods may become even harder to find. Overall, although the rare earth market faces short-term fluctuation challenges, the industry generally holds a positive judgment on its long-term development prospects.

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