China's Northern Rare Earth Forms Joint Venture for NdFeB Magnet Production

Northern Rare Earth

China's Northern Rare Earth (NRE), one of the country's leading light rare earths producers, has announced the formation of a joint venture (JV) to construct a high-performance neodymium-iron-boron (NdFeB) magnet production plant in Baotou, located in the Inner Mongolia region. This initiative is part of NRE's strategic push to expand its footprint in the magnet and renewable energy sectors.

The JV, named Northern Zhaobao Magnet (Inner Mongolia), will focus on producing NdFeB permanent magnets, which are essential for a variety of high-tech applications, including wind turbines, compressors, and industrial motors. The plant will have a production capacity of 3,000 tons per year. NRE has committed a significant investment of 40 million yuan ($5.6 million) in the JV, which will be a collaborative effort with well-established magnet manufacturers Ningbo Zhaobao Magnet and Ningbo Souwest Magnet, alongside Suzhou Torin Drive, a key equipment producer.

The JV has a registered capital of 100 million yuan, with ownership stakes distributed as follows: NRE holds 40%, Ningbo Zhaobao Magnet 35%, Torin Drive 12.5%, and Ningbo Souwest Magnet 12.5%. Construction is slated to be completed by May 2025.

This move marks another key development in NRE's ongoing expansion within the rare earth industry. Recently, the company commenced operations at its first phase of a rare earth smelting upgrade plant in Baotou Huamei, a wholly-owned subsidiary. The plant is set to become the world's largest rare earth feedstock production facility, with an impressive extraction and separation capacity of 106,661 tons per year (t/yr) of rare earth oxide (REO). Furthermore, its processing capacity for mixed rare earth concentrate is set at 198,000 t/yr, which is equivalent to 115,018 t/yr of 58.09% REO, alongside precipitation and crystallization capacities of 141,070 t/yr REO.

Despite the strong push for growth, NRE's financial performance has been affected by weaker-than-expected demand in the global rare earth market. In the third quarter, the company posted a 1.5% year-on-year revenue increase, reaching 8.56 billion yuan, while its net profit saw an 11% increase to 359.92 million yuan. However, NRE's performance for the first three quarters of 2024 showed a 14% decline in revenue to 21.55 billion yuan, and a significant 71% drop in net profit, which fell to 405.32 million yuan. The weaker-than-expected demand and lower rare earth prices—partly due to abundant spot supplies and insufficient growth in consumer demand—continue to weigh on the company's profits. The price of praseodymium-neodymium metal dropped by 28% year-on-year, with the average price during January-September falling to 477 yuan/kg.

Strategic Implications and Market Outlook

NRE's decision to enter the NdFeB magnet production market aligns with China's broader ambitions to dominate the rare earth sector, particularly in materials critical for renewable energy applications. As the world transitions toward cleaner energy sources, demand for NdFeB magnets is expected to grow, driven by the proliferation of electric vehicles, wind energy, and other green technologies.

However, NRE's profitability is under pressure due to the current low prices of rare earth metals, which could dampen its short-term outlook. The company's performance in the fourth quarter will depend on factors like global rare earth prices, market demand for clean energy technologies, and the success of its ongoing projects, such as the Baotou Huamei plant.