China's rare earth export controls are leading to a "earnings feast" for its own corporations. As rare earth corporations in China log record-high results one after another on price increases and profitability improvements driven by supply controls, foreign media said Chinese corporations' dominance in the global supply chain is also growing.
According to Chinese financial outlet Cailian Press on the 14th, China Rare Earth Group's listed unit Zhongxi Youse (中稀有色) said in a filing that first-half net profit is expected to rise 410%–493% from a year earlier to 370 million–430 million yuan (about 81.1 billion–94.3 billion won). That is three times last year's full-year net profit of 128 million yuan (about 28.1 billion won).
By quarter, first-quarter net profit rose 262% from a year earlier, and second-quarter net profit is estimated to have increased by up to 50% from that.
China Rare Earth Group was launched in 2021 by consolidating multiple state-owned corporations as China sought to strengthen the competitiveness of its rare earth industry. It is one of China's largest rare earth corporations, spanning core processes from mining to smelting, separation, and processing. Zhongxi Youse is a listed unit under the group focused on rare earth smelting and separation, and it has recently expanded mine development.
According to Zhongxi Youse, the latest earnings jump stemmed from a combination of higher rare earth product prices, restructuring of loss-making affiliates, and improved results at the Dabao Mountain (大宝山) copper mine in which it holds equity. The company also said it plans to develop additional mines to expand production capacity and add smelting and separation facilities to raise its self-sufficiency in raw materials.
The earnings increase also aligns with the Chinese government's tougher policy on rare earth export controls. Last year, China designated rare earths as a national strategic resource and has gradually tightened export licensing and item-by-item controls. The central government now strictly manages the entire chain of mining, smelting, and separation, and is strengthening production quota management and crackdowns on illegal mining. As a result, overseas corporations can obtain related products only with the Chinese government's approval.
As China, which effectively monopolizes the rare earth market, blocks export channels, rare earth prices are also rising. According to Trading Economics, neodymium, a key material for permanent magnets used in electric vehicles, has climbed more than 80% over the past year, and prices for heavy rare earths such as dysprosium and terbium are also increasing.
Meanwhile, Chinese rare earth corporations are also expanding their dominance in the global market. According to the Financial Times (FT), Chinese corporations are rapidly catching up even in rare earth magnets and high value-added materials, areas where overseas companies such as those in Japan had relatively strong positions. With export controls by the Chinese government making raw material procurement for overseas companies unstable, global customers are turning to Chinese companies, it said.
Analysts say China's grip on the rare earth supply chain will be hard to shake in the short term. The FT analyzed that the United States, the European Union (EU), and the United Kingdom would need to invest $23.6 trillion (about 35,110 trillion won) over 25 years to break their reliance on China in the rare earth industry, adding, "The issue is not only how much the expense of decoupling from China will be, but also that China has the capability to block or hinder it."