Highlights

• China Northern Rare Earth Group forms joint venture.
• Objective: Build 5,000-metric-ton rare earth oxide separation production line by 2026.
• Expected to generate 829 million yuan in annual income.
• Strategic focus on technology and market expansion.
• Reflects China's continued leadership in rare earth processing and critical materials for green technology.

As Rare Earth Exchanges has already reported, China Northern Rare Earth Group announced its investment of 153 million yuan to form a joint venture with Fujian Jinlong Rare Earth Co., Ltd., establishing Northern Jinlong (Baotou) Rare Earth Co., Ltd. This partnership aims to build a 5,000-metric-ton rare earth oxide separation production line by the end of 2026, with a total project investment of 457 million yuan. The joint venture intends to leverage complementary advantages in technology, market presence, and resource management to enhance rare earth supply and product development.

The recent update was covered by Shanghai Metal Market (opens in a new tab).

The project aims to improve rare earth resource control, diversify product categories, and strengthen China's Northern Rare Earth industry influence. The initiative also focuses on creating a competitive supply chain for rare earth materials critical to downstream industries such as renewable energy and advanced manufacturing.

Economic Impacts

Expected to generate an average annual income of 829 million yuan with a net profit of approximately 49 million yuan, the project has a 12.04% post-tax internal rate of return and a projected payback period of 7.73 years. Risk mitigation strategies, including inventory optimization and supplier partnerships, despite volatile rare earth prices and market uncertainties, will ensure stability.

Industry Dynamics

The rare earth market has faced significant challenges in 2024, with weak demand and declining prices. However, China Northern Rare Earth experienced growth in rare earth smelting, separation products, and functional materials, driven by sectors like NEVs, wind power, and variable frequency air conditioners. The company anticipates price stabilization and recovery in 2025, particularly for Pr-Nd alloy and medium-heavy rare earths affected by supply chain disruptions in Myanmar.

Broader Implications

The collaboration underscores China's continued dominance in rare earth mining and processing, a sector critical to global technological and energy transitions. However, questions remain about the environmental impact, potential overcapacity, and whether global competitors can effectively challenge  China's strategic lead. This joint venture reflects a strategic move to reinforce China’s leadership in rare earths, capitalizing on evolving markets and the rising demand for advanced materials essential to the green economy.