The Chinese rare earth industry is ramping up production significantly. Major corporations are announcing plans to establish or expand high-performance magnet production facilities in succession, with investments made by companies in the past year for production increases reportedly reaching several hundred billion won. With the Chinese government recently announcing it will partially resume approvals for rare earth exports, attention is also being drawn to the potential expansion of supply by rare earth producers.
According to the Chinese economic media ChaiLianShe, major rare earth producer Yingluohua announced on the 27th of last month that it is establishing a production facility for 5,000 tons of sintered neodymium-based (NdFeB) magnet materials annually in the Dongyang area of Zhejiang Province, and that it will invest a total of 424 million yuan (approximately 802 million won) in this project. The goal is to complete it within 18 months after starting construction.
Earlier, Jinli Yongci announced it would promote an expansion project for an annual capacity of 20,000 tons in addition to its existing annual capacity of 40,000 tons for high-performance magnets. The total investment amounts to 1.05 billion yuan (approximately 198.7 billion won), making it the largest single project in the industry. Jinli Yongci will secure a total annual production capacity of 60,000 tons of high-performance magnets upon completion of the construction in two years.
According to ChaiLianShe, the total investment amount from publicly listed companies that have implemented or announced high-performance magnet production increase projects based on rare earths since August 2024 has reached 3 billion yuan (approximately 568.1 billion won) as of last month.
The Chinese rare earth industry is also strengthening its vertical integration strategy. The rare earth industry is divided into three stages: ▲mining ▲smelting and separation ▲magnet processing, with companies pushing for integration across the entire process. According to local media, Northern Rare Earth has a subsidiary that exclusively holds a mine in Baotou, Inner Mongolia, and has completed a value chain that extends to smelting, separation, material development, and applications. Northern Rare Earth's production capacity for high-performance magnets reaches 100,000 tons annually.
Rare earths are key materials used in advanced manufacturing industries, with high demand in electric vehicles, aerospace, renewable energy, and robotics. As of 2024, China's rare earth production capacity is at a level of 600,000 tons annually. In particular, neodymium-based magnets, one of the main types of rare earth magnets, have become essential materials for high-performance power systems and servomotors due to their lightweight, compact size, and high performance.
According to analysis data from the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, demand for neodymium-based magnets in humanoid robots and low-altitude mobility sectors is expected to grow by 24.9% annually starting in 2030, with a total of 33,000 tons projected to be needed by 2035. Northern Rare Earth recently identified humanoid robots as a key field driving future demand for rare earths, stating that "Tesla's Optimus humanoid requires 3.5 kg of neodymium-based magnets per robot."
According to the IR materials released by Northern Rare Earth on the 24th of last month, rare earth prices experienced a decline from April to May but have recently rebounded. The market was affected when the Chinese government controlled rare earth exports last April, but expectations of market recovery are forming as the Chinese government has recently partially resumed approvals for rare earth exports to the United States and Europe.
ChaiLianShe noted that "the recent order situation for major rare earth companies is relatively stable, and companies maintain an optimistic stance on future trends in rare earth prices," adding that "there is a possibility for rare earth prices to rebound ahead of the traditional demand peak season in September and October."