中国稀土双寡头：北方稀土与中国稀土集团的产业格局

Aqib will be in D.C. from September 7-11! If you’d like to chat rare earths, semiconductors, and open model security, reach out to [email protected].

If you know anything about rare earths, you know China is great at digging them up and refining them, while America sucks at both. Unfortunately, this is where most analyses end. To go one step further requires understanding the entities leading China’s rare earth juggernaut, and how they built Beijing’s rare earth weapon. That’s exactly what we’ll explore in today’s deep dive. This story revolves around China’s two creatively-named state-owned giants, China Northern Rare Earth 中国北方稀土 and China Rare-Earths Group 中国稀土 (CREG). We’re going to call them “China Northern” and “China Southern” from here on out; CREG doesn’t have Southern in its name, but it’s in the South, and we think it’s a lot catchier.

The fact that these two companies reign over the rare earths world cannot be boiled down to a single factor. These things are messy. To pick it apart, we (Aqib and Nick) look at China’s duopoly from multiple angles, covering the firms’ history, industrial processes, and, on the human level, their workforce.

In our efforts to unpack it all, we pull on several threads, including:

• Why the industry is divided sharply between North and South, and what each region is in charge of,
• The ownership politics beneath that structure, such as which parts of the state own each company and why the South is so much harder to control,
• What rare earths smuggling reveals about China’s state capacity,
• The technical reasons these companies are ahead,
• And what it’s like to work at a Chinese rare earths company.

North vs. South

Nearly all of China’s rare earth production runs through two companies. China Northern Rare Earth, headquartered in Baotou 包头, Inner Mongolia, is the world’s largest producer of light rare earths, the volume elements that go into permanent magnets. China Rare Earth Group (hereafter “China Southern”), headquartered in Ganzhou 赣州, Jiangxi, controls the heavy rare earths — the scarcer and more important elements that give Beijing its chokehold on defense supply chains. Since 2024, the national production quotas have gone to these two firms and no one else.

Why two companies, and why those two places?

Rare earths split into light elements, including the magnet workhorses neodymium and praseodymium, and heavy elements like dysprosium and terbium, the additives that let a permanent magnet keep working inside a hot EV motor or a missile’s guidance systems. The two groups sit in different kinds of ground. China’s light rare earths come overwhelmingly from one place, the Bayan Obo 白云鄂博 deposit in Inner Mongolia, a single colossal open pit where they occur alongside iron ore. The heavies sit in ion-adsorption clays spread across the hillsides of Jiangxi, Guangdong, Fujian, and Hunan, where rare earth ions cling loosely to weathered soil and can be flushed out with ammonium sulfate solution.

Aerial shot of Bayan Obo in Inner Mongolia, compared to Manhattan. Source.

In the North, because the ore was all in one place, rare earths were a byproduct of state steel from the beginning. Consolidation in the North was finished by 2015 because of this simplicity.

The South was harder for both physical and political reasons. Ion-adsorption deposits are diffused throughout the provinces, so the region bred hundreds of small operations, chronic illegal mining, and smuggling routes through Myanmar, which has deposits of its own. On top of that sat a crowd of champions backed by provincial and municipal governments, each with revenue and jobs at stake and varied interest in handing its assets up the chain. When Beijing forced the industry into the “Big Six” 六大稀土集团 structure in the mid-2010s, the North got one group and the South got five. The original plan had been exactly two groups, one North and one South, but Southern resistance stalled it at six.

Beijing finally completed the plan in December 2021, fusing the rare earth assets of Chinalco 中铝, Minmetals 五矿, and Ganzhou’s municipal champion into China Rare Earth Group. Guangdong’s assets were not folded in until 2024; the two-firm quota structure dates only to 2024, and Beijing stopped publishing the quota numbers altogether in 2025.

The consolidated structure was in place for barely a year before the 2025 export restrictions, and running those restrictions through dozens of quarreling producers instead of two compliant groups would have been a far messier proposition. The weapon was finished just in time to be fired, which ought to remind us how this arrangement is still settling, still being improvised in places, and still discovering what its own workforce will tolerate.

How much are these companies worth?

The messy consolidation of the South also shows in the obscurity of these companies’ financials. China Northern generated about ¥32.97 billion (roughly $4.6 billion) in 2024 revenue, employs just under 10,000 people, and by April 2026 had a market cap of about ¥177.9 billion ($25 billion), making it the most valuable rare earth company in the world. Revenue jumped to ¥42.56 billion in 2025, with net profit more than doubling to ¥2.25 billion, as export-control-driven prices flowed through.

China Southern, on the other hand, posted about ¥3.03 billion in 2024 revenue, down 24 percent, and a net loss of roughly ¥287 million, less than a tenth of Northern's revenue. But this figure is probably misleading, since it describes only a slice of the group, its heavy rare earth processing and separation assets, not the full mining base or the unlisted parent "China Rare Earths Group" itself, whose total consolidated revenue and profit Beijing has never disclosed. For context, MP Materials brought in just $204 million in revenue in 2024, less than a twentieth of Northern's, and employs fewer than a thousand people. Even after a year of Washington deal-making pushed its valuation up, MP's market cap is around $10 billion (on a good day), well under half of China Northern's.1

MP Materials market cap. Source.

The Southern Smuggling Snafu

The South also has to deal with smuggling from Myanmar, bypassing China’s set quotas. The production quota system was predominantly designed as a response to environmental concerns, as unregulated mining, particularly in the South, led to acid and ammonia leaking into streams irrigating rice fields as well as landslides.

Pollution into Weikuang Dam in Baotou (包钢尾矿库), where the tailings of REM and steel operations go. From BBC.

Many of the small-time private mine operators that were running dirty mines in the South left for dirtier pastures in conflict-plagued Myanmar. Now, much of China’s heavy rare earth mining comes from Chinese firms operating in Myanmar. The pollution and environmental cost wrought upon Burma is extensive. But the larger thorn for Beijing is that smuggling indicates a lack of state capacity to enforce quotas and secure self-sufficiency.

We can gauge the scope of smuggling by looking at China’s production quotas before they became hidden. The quotas for light rare earths from the North and heavy rare earths from the South have some correlation, as both are used for making NdFeB permanent magnets, which are ubiquitous in EVs, smartphones, wind turbines, and every sort of consumer electronic. NdFeB magnets mainly require light rare earths, but they are often sprinkled with a bit of heavy rare earth to make them heat resistant.2

Given China manufactured about 260,000 tons of NdFeB magnets in 2024, China would need about 1,750 tons of dysprosium, the heavy rare earth, for its dusting of heat resistance.3 The problem is the national production quotas for dysprosium in 2024 were less than nine hundred tons. The gap of almost a thousand tons of dysprosium must be made up by a combination of hidden overproduction from China Southern and smuggling from Burmese mines.