China’s rare earth sector faces financial strain as prices decline

As global demand for rare-earth elements remains pivotal in high-tech industries, China, through entities like China Rare Earth Group and its subsidiary China Rare Earth Resources and Technology, navigates strategic shifts amid financial challenges in the sector.

China's leading state-owned rare-earth companies are facing financial losses amid falling prices, as the government asserts greater control over the resources and supply chain for strategic reasons.

Rising Nonferrous Metals, a Shanghai-listed rare-earth miner, recently reported a significant downturn, projecting a net loss between 271 million yuan and 311 million yuan ($37.33 million to $42.84 million) for the first half of the year, Caliber.Az reports citing the foreign media.

This represents a stark reversal from a net profit of 102.09 million yuan recorded a year earlier.

The Guangzhou-based company attributed its sharp decline in financial performance to a significant drop in sales prices for its key rare-earth products, specifically dysprosium, terbium, and didymium (a combination of neodymium and praseodymium). This resulted in a dual impact of shrinking profit margins and inventory devaluation due to falling prices. Despite implementing cost-cutting measures, the company's board acknowledged its inability to mitigate the effects of the price downturn.

The company fell under the umbrella of China Rare Earth Group, a state-owned platform central to Beijing's strategic control over the rare-earth industry, by the end of last year. Its former majority shareholder, Guangdong Rising Holdings Group, owned by the Guangdong provincial government, transferred its entire 100 per cent stake as part of Beijing's ongoing efforts to consolidate the sector. China Rare Earth Group itself was formed in December 2021 through the merger of three state-owned rare-earth miners, establishing it as a "central company" under direct control of the State Council, one of fewer than 100 large-scale elite corporations in China.

China Rare Earth Resources and Technology is also a subsidiary listed under China Rare Earth Group.