Highlights

• Northern Rare Earth achieved a net profit increase of 1,882.5% to 2,014.7% in the first half of 2025, driven by strategic production and technological innovation.
• The company significantly increased rare earth metals output by 60.4% and functional materials by 12.3%.
• This highlights China's comprehensive approach to rare earth development.
• China's national strategy includes two designated Rare Earth Bases.
• The aim is to vertically integrate rare earth technologies across strategic sectors like defense, clean energy, and electronics.

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China’s rare earth giant posts nearly 2000% profit jump as it ramps up metals output, automation, and high-tech innovation—with major implications for U.S. industry resilience.

Northern Rare Earth (China Northern Rare Earth Group) has just released a stunning mid-year performance update: net profit attributable to shareholders soared between 1,882.5% and 2,014.7% year-over-year for the first half of 2025. The company hit all-time highs in rare earth separation products, rare earth metals, and functional materials output—underscoring its strategic importance to China's industrial and export strength.

What’s driving the surge? A coordinated push across subsidiaries and production bases. Rare earth metals output jumped 60.4% year-on-year, while functional materials rose 12.3%. The firm also hit over 56% of its annual production targets for permanent magnet motors—vital components in everything from EVs to fighter jets.

A reminder that Northern Rare Earth is part of Baogang Goup, and is partially state owned.  Baogang Group, a state-owned enterprise, owns the controlling stake in China Northern Rare Earth Group High-Tech Co., Ltd. (opens in a new tab), which is publicly listed. Ultimately, the Chinese central government, through the State-owned Assets Supervision and Administration Commission (SASAC) (opens in a new tab), exerts control over both entities. They operate the largest rare earth mine, the Bayan Obo deposit. Any news coming out of state-backed entities should be vetted by as many credible sources as possible. 

Breakthroughs Across the Board

According to the state-owned company’s entry today (opens in a new tab), several developments stand out with global implications. Subsidiaries like Huamei (opens in a new tab) and Gansu Rare Earth (opens in a new tab) ramped up full-capacity operations, green smelting upgrades, and project execution to boost both volume and quality. Automation rolled out across metal production lines, with Huaxing Rare Earth (also a  shareholder of Baotou Keri Rare Earth Materials Co., Ltd.)  reporting an 83.8% increase in metal output thanks to automated feeding systems and tech upgrades.

RuiXin Company (opens in a new tab) made critical gains by refining electrolytic cell design, deploying recycled graphite anodes to cut costs while raising output. Meanwhile, Zhongxin Antai’s (opens in a new tab) expansion project for 8,000 tons of rare earth metals/alloys made major progress—meeting over 50% of its annual production, revenue, and profit targets by midyear.

Magnet Materials and Consumer Growth Strategies

In the value-added segment, Northern Rare Earth’s magnetic materials unit posted a 19.2% increase in NdFeB alloy flake production. A new 50,000-ton rapid-quenching alloy project is under construction, aimed at scaling up advanced magnet manufacturing.

Elsewhere, Tianjiao Qingmei (opens in a new tab) overcame weak polishing materials demand by aggressively targeting over 30 new customers through tailored product strategies, already reaching 62% of its profit target for the year. Hydrogen-storage subsidiary Zhuaneng (opens in a new tab) also ramped up R&D and market share in the emerging hydrogen economy, boosting production by nearly 40%.

Tech Innovation Anchors Future Growth

The Rare Earth New Materials Technology Innovation Center is quietly laying the groundwork for China’s next leap. Pilot lines for heat-managing rare earth textiles and AI-optimized disk motors are now under testing. The center aims to commercialize novel products like rare earth fireproof coatings, fiber materials, and micro-motors—directly strengthening China’s hold on high-tech supply chains.

Implications for the U.S. and Allies

For Western economies looking to decouple from Chinese rare earth dominance, this is a warning shot. Northern Rare Earth isn’t just scaling production—it’s integrating R&D, cost control, automation, and downstream applications to deepen strategic control. The U.S. may face widening gaps unless industrial policy, investment, and workforce mobilization catch up fast. And to date, Rare Earth Exchanges (REEx) suggests this industrial policy is nowhere near where it should be in the USA, for example. While the Big Beautiful Bill makes money available for resource commodity extraction, for example, the imperative for an integrated supply chain calls for far more.

Two Bases, One Strategy: China's Next-Gen Rare Earth Push

Back to Northern Rare Earth, this momentum is no accident—it reflects a deliberate national strategy. China has now designated two rare-earth bases as central hubs to fuse upstream dominance with downstream innovation. Northern Rare Earth anchors the Inner Mongolia Rare Earth Base, while a complementary _Southern Base_—focusing on medium and heavy rare earths—is being built out with equal intensity. Together, they serve as launchpads for deep vertical integration into strategic sectors like medicine (MRI contrast agents, radiotherapeutics), clean energy (wind turbine magnets, hydrogen storage alloys), consumer electronics (miniaturized motors, display phosphors), and defense (precision guidance systems, stealth coatings).

These bases are backed by billions in public-private investment, and the infrastructure being built—industrial parks, R&D centers, and innovation incubators—is designed to convert China’s rare earth reserves into long-term global technological leverage. From specialty alloys for hypersonic missiles to next-gen battery chemistries, the Chinese state is betting big that whoever controls rare earth innovation will control 21st-century supply chains.

Bottom Line

While the West debates permits, subsidies, and ESG compliance while celebrating victory with the MP Materials Department of Defense deal (it’s a start, the first inning in a nine-inning game), China is quietly executing a whole-of-nation strategy. Northern Rare Earth’s record-setting midyear performance—and the strategic infrastructure surrounding it—is a stark reminder: for Beijing, rare earths are not just raw materials. They are the foundation of future industrial power.