China’s Rare-Earth Producers Convert Strategic Leverage Into a First-Half Profit Surge

China Rare Earth Resources and Technology reported the clearest completed result. First-half revenue fell 12.19 per cent year on year to 1.647 billion yuan, but net profit attributable to shareholders rose 46.53 per cent to 237 million yuan. Profit excluding non-recurring items increased even faster, climbing 55.49 per cent to 240 million yuan. These figures imply that its attributable net margin expanded from approximately 8.6 per cent a year earlier to around 14.4 per cent. The improvement was therefore not driven by simple volume growth. The company pointed to more disciplined procurement, tighter integration of production and sales, lower expenses, improved cost control and better timing of purchases and sales as important contributors. Stronger rare-earth market conditions and a more favourable product mix allowed it to extract more profit from a smaller revenue base.

China Northern Rare Earth, the country’s largest producer, is showing an even larger increase. Its preliminary forecast places first-half net profit between 1.98 billion yuan and 2.06 billion yuan, representing growth of 112.74 per cent to 121.33 per cent. Profit excluding exceptional items is expected to reach 1.99 billion yuan to 2.07 billion yuan, up between 121.90 per cent and 130.82 per cent. The upper end would approach the company’s entire 2025 net profit of roughly 2.25 billion yuan. Management attributed the improvement to constrained raw-material supply, expanding demand and stronger, although still volatile, rare-earth prices. Production of separated products, rare-earth metals and new materials all reached first-half records. Its magnetic-materials subsidiary generated approximately 9.5 billion yuan in revenue, an increase of about 107 per cent, showing that the earnings recovery extends beyond mining and separation into higher-value materials.

Results from JL Mag provide further evidence of healthy downstream demand. The dual-listed permanent-magnet producer expects first-half net profit of 400 million yuan to 460 million yuan, an increase of 31.17 per cent to 50.84 per cent. Excluding non-recurring gains, profit is forecast to rise between 57.26 per cent and 82.90 per cent, while overall revenue increased by approximately 30 per cent. Revenue from new-energy vehicles and automotive components grew at a similar rate, whereas revenue from robots and industrial servo motors expanded by about 90 per cent. JL Mag has also begun small-batch deliveries of motor rotors for humanoid robots. This distinction matters because the connection between AI and rare-earth demand is mainly physical rather than computational: high-performance magnets are required in robotics, precision motors, cooling equipment, storage systems and automated factories, while electric vehicles and wind turbines remain the larger structural sources of magnet demand.

Geopolitics has restricted selected trade flows without shutting down China’s wider industry. Export controls introduced in April 2025 covered seven medium and heavy rare-earth elements, their compounds and certain magnets. Beijing tightened restrictions on dual-use shipments to Japan in January 2026 following a diplomatic dispute over Taiwan. Customs data showed that China sent no gallium, dysprosium, terbium or yttrium to Japan in June, while no yttrium was shipped to the United States for a second consecutive month. At the same time, China’s total rare-earth magnet exports rose to approximately 5,649 tonnes in June from 4,730 tonnes in May, demonstrating that licensed commercial trade continued with other customers. Across the first seven months of 2026, total rare-earth exports fell 10 per cent to approximately 34,706 tonnes. Lower physical exports can coexist with stronger producer earnings when scarcity raises realised prices, companies improve their sales mix and more material is absorbed by China’s own magnet and advanced-manufacturing industries.

China’s structural advantage remains formidable. In 2024, it accounted for about 60 per cent of mined magnet rare earths, 91 per cent of refined production and 94 per cent of sintered permanent-magnet manufacturing. The International Energy Agency estimates that full implementation of China’s expanded export controls could expose US$6.5 trillion of annual downstream production outside China to disruption. Building diversified mining, refining and magnet capacity sufficient to meet projected non-Chinese demand would require approximately US$60 billion over the coming decade, with refining and magnet manufacturing presenting the largest bottlenecks. Washington’s latest package of roughly US$2 billion in critical-mineral investments signals that the response is accelerating, but new facilities still face higher costs, lengthy qualification processes and shortages of specialist expertise. Investors are already pricing in much of China’s advantage: China Rare Earth traded at around 254 times earnings and Northern Rare Earth at roughly 58 times earnings in early August. The first-half profit surge confirms the sector’s current strength, but such valuations leave little room for falling prices, policy changes or faster-than-expected foreign competition.