China Launches World's Largest Rare Earth Production Base in Baotou

Northern Rare Earth (NRE)

Northern Rare Earth (NRE), a leading Chinese light rare earth producer, has officially commenced operations at the world's largest rare earth feedstock production base, situated in Baotou, Inner Mongolia. The project, which represents a significant milestone in global rare earth production, began output at the first phase of a major smelting upgrade plant at Baotou Humei, a wholly-owned subsidiary of NRE, on October 15. The plant’s construction started in March 2023, with an investment totaling 7.8 billion yuan ($1.1 billion).

Facility Capacity and Impact on Rare Earth Market

The upgraded facility boasts an impressive extraction and separation capacity of 106,661 tons per year (t/yr) of rare earth oxide (REO). Additionally, it features a processing capacity of 198,000 t/yr for mixed rare earth concentrate, translating to an equivalent of 115,018 t/yr of 58.09% REO. The plant’s precipitation and crystallization capacity stands at 141,070 t/yr REO, while its burning capacity is 39,600 t/yr REO. By year’s end, these upgrades are expected to increase Baotou's rare earth smelting and separation output capacity to 234,000 t/yr, according to market sources.

Looking ahead, NRE plans to move forward with a second phase of construction at the Baotou facility, although details such as launch date, project capacity, and duration remain undisclosed.

Auction Sales and Market Trends

In recent market activity, NRE sold 295 tons of praseodymium-neodymium metal via auctions held on the Baotou rare earth products exchange (Repe). This marked the company’s inaugural metal auction series, which began on September 10. NRE subsequently increased the starting prices of the metal to 530 yuan per kilogram on October 9, up from 525 yuan/kg during previous sales in September and early October. Despite this price adjustment, lower consumer demand was evident, with only 5 tons sold during auctions held on October 11 and 14, leaving 45 tons unsold.

Financial Performance

Despite these production advancements, NRE has faced financial challenges. The company reported a 21.2% year-on-year decline in revenue, totaling 12.99 billion yuan, for the January-June period. Net profit fell sharply by 95.7%, amounting to just 45.39 million yuan. NRE attributed the financial setbacks to declining prices of praseodymium-neodymium due to lower-than-expected demand growth from key downstream sectors and an oversupply of rare earth feedstock.