China’s rare earth producers have reported or anticipated hefty first-half profits, with Beijing’s use of the strategically critical minerals as leverage in trade relations with Japan and the United States not appearing to impede normal activity.
The geopolitical factor – US President Donald Trump announced more than US$2 billion of domestic mining investment on Friday, widely viewed as diversifying the country’s rare earth supply chain away from China’s near-monopoly – has helped drive up product prices and also the valuations of listed Chinese firms.
Shenzhen-listed China Rare Earth Resources and Technology saw its first-half net profit surge 46.53 per cent year on year to 237 million yuan (US$35.1 million), the company said in an exchange filing on Friday.
Its price-to-earnings ratio, an indicator of investor expectations, was 636.88 in February and currently stands at around 254, still very high compared with the market average.
The same ratio for Shanghai-listed China Northern Rare Earth (Group) High-Tech, the nation’s largest producer, reached 105.4 in February and now stands at about 58.
China Northern has said it expects a first-half net profit of between 1.98 billion yuan and 2.06 billion yuan, representing year-on-year growth between 112.74 and 121.33 per cent.
“Rare earth prices have maintained a strong upwards trajectory driven by the rapid expansion of the AI supply chain and surging demand for hardware components,” said Guo Lingyu, an investment manager at Jianyuan Fund.