Highlights

• Baotou's Jinlong Rare Earth smart factory cut material transfer times by 29% and work delays by 52% using IoT, AI, and big data integration in under one year.
• All 107 large-scale rare earth enterprises in Baotou have achieved 100% digital transformation coverage, with automated systems replacing manual processes and reducing workforce needs while boosting productivity by 25%.
• China's rare earth digital manufacturing push, backed by national policy and AI-driven optimization, is lowering production costs and raising competitive barriers for Western supply chains.

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China’s rare earth capital, Baotou, is rapidly digitizing its rare earth industrial base, using automation, AI, and cloud-based systems to drive efficiency, safety, and scale—an effort with clear implications for global competitors.

According to state media, a RMB 23.84 million (≈US$3.3 million) smart factory built by Jinlong Rare Earth New Materials has fully integrated IoT, big data, and AI across its production process in under one year. The results are striking: internal material transfer times cut by 29%, work-in-process delays reduced by 52%, and sharp declines in handling errors and workplace safety incidents. Management described the productivity gains as exceeding expectations.

Over the past two years, Baotou has made rare earths the centerpiece of a broader push to convert legacy heavy industry into “high-precision, intelligent manufacturing.” Municipal funding has been directed into digital upgrades, with 107 rare earth-related projects added to a city-level digital transformation pipeline.

Officials report 100% digital transformation coverage among large-scale rare earth enterprises in the city.

At Wolong Electric Drive (Baotou), manual testing has been replaced by fully automated, high-power test systems for permanent magnet motors. The company reports three operational breakthroughs: workforce reductions of more than 10 staff, a 25% productivity increase, and testing capacity aligned to 14 million kilowatts of annual output. The system also removes workers from high-risk environments, creating a replicable model for the rare earth motor sector.

Local digital service firms are emerging as enablers. Caijiang Intelligent delivered an end-to-end digital platform for Tianhe Magnetics, cutting production line changeover times from four hours to 30 minutes and boosting equipment utilization by 25%. Meanwhile, Jinming Information Technology is developing an AI “hydrogen decrepitation” model for rare earth permanent magnets—aimed at reducing energy use and enabling predictive maintenance in magnet production.

Policy support underpins the push. Since Baotou was designated a regional pilot city for rare earth digital transformation in 2024, local authorities have rolled out targeted incentives covering smart factories, cloud migration, and industrial internet adoption. Several firms—including China Northern Rare Earth Group—have been recognized by China’s Ministry of Industry and Information Technology as national-level smart manufacturing leaders.

Watching from the West

Baotou’s rapid digitization, at least according to state-affiliated news, suggests China is not only defending its rare-earth supply dominance but also lowering unit costs, improving yields, and embedding AI into magnet and materials manufacturing. Rare Earth Exchanges™ has chronicled, for over a year now, relentless productivity pushes in this sector.

For U.S. and allied supply chains, this raises the competitive bar beyond mining and separation—toward software-driven manufacturing scale and speed that should be understood.

Disclaimer: This article is translated and summarized from reporting by a state-owned Chinese media entity. All information should be independently verified.

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