Benefiting from the continuous release of rare earth permanent magnet demand brought by new energy vehicles, industrial motors, wind power, etc. this year, Shenghe Resources (600392), the “leader” of rare earth permanent magnets, recently handed over a very dazzling semi-annual report performance forecast.
Shenghe Resources recently announced that it is expected that the net profit attributable to shareholders of listed companies in the first half of 2022 will be 1.280 billion yuan to 1.420 billion yuan, a year-on-year increase of 135.76%-161.55%. After deducting non-recurring profit and loss matters, the company’s performance is expected to increase by 732 million yuan to 872 million yuan, a year-on-year increase of 137.90% to 164.27%.
Shenghe Resources said that during the reporting period, the market demand for the company’s main rare earth products was generally positive, and product prices rose significantly. Among them, the average price of praseodymium and neodymium products, which account for the largest proportion of revenue, increased by about 80% compared with the same period last year. With the advantage of rare earth resources, the company has seized market opportunities, tapped production capacity potential, and ensured market supply. Compared with the same period last year, the company’s revenue has increased significantly.
Rare earths enter demand-driven “strong cycle”
As a non-renewable and scarce strategic resource, rare earth is known as “industrial monosodium glutamate” and “mother of new materials” because of its wide application in modern industrial manufacturing such as petroleum, chemical industry, metallurgy, textile, etc., thus attracting the attention of countries around the world. , all countries regard it as an important strategic resource for global deployment. my country is currently the largest rare earth country in the world in terms of reserves, the country with the most advanced rare earth extraction technology, and the largest rare earth exporter.
Since the second quarter of 2020, global rare earth prices have continued to rise, which has lasted for about two years, and once hit a new high in the past ten years. This round of rare earth price increases is slightly different. The previous rare earth price increases were basically policy-driven “pulse” increases, but this round of price increases that lasted nearly two years were mainly driven by demand.
Industry insiders have analyzed that in recent years, the world has faced the issue of “carbon reduction”, which has driven the strong demand for rare earths in the fields of new energy vehicles, wind power, industrial motors, and consumer electronics. The price of upstream raw materials rare earth has continued to rise for nearly two years.
CITIC Securities predicts that under the vigorous promotion of global environmental protection policies, new energy vehicles, industrial motors and other fields will continue to develop rapidly. It is estimated that in 2030, domestic and overseas new energy vehicles will drive 60,000 tons and 78,000 tons of high-performance NdFeB respectively. It is expected to maintain a long-term high-speed development trend.
In addition, according to the “14th Five-Year Plan” for the development of the raw material industry, the rare earth prospecting and mining rights are appropriately allocated, and the scale of mining, smelting and separation is scientifically controlled, and the growth rate of output is closely related to the growth of downstream market demand. It is expected that the rare earth production and smelting separation indicators may be released on demand at an average annual growth rate of 20-30%. The overseas supply disturbance is limited, and the supply and demand fundamentals of the rare earth industry are expected to continue to improve.
The demand for permanent magnet materials continues to explode
Permanent magnet materials have broad application prospects. According to the “2021 China Rare Earth Industry Panorama” released by the Prospective Industry Research Institute, in the global downstream applications of rare earth, permanent magnet materials account for the highest proportion, reaching 25%. According to the research report issued by the non-ferrous metal team of Huajin Securities, in the application of rare earth permanent magnets, motors account for more than 60%.
In fact, the big price increase of permanent magnet materials in this round is mainly due to the express train of new energy. Due to the continuation of the boom in emerging industries such as wind power and new energy vehicles, the demand for rare earth permanent magnet materials has grown rapidly. Under the superposition of the three cycles of electric vehicles, industrial motors, and wind power, the demand for permanent magnet materials has exploded.
It is predicted that by 2025, the output of rare earth permanent magnet materials in my country and the world will reach 284,000 tons and 310,000 tons respectively. In the future, the global supply of high-performance NdFeB will be mainly concentrated in China.
At present, people in the industry generally believe that with the rapid growth of downstream demand for new energy vehicles, industrial motors, and wind power generation, the demand for rare earth permanent magnet materials, especially high-performance rare earth permanent magnet materials, will increase significantly. The strong cycle of materials will not end easily, and prices are expected to remain high for some time.
In the future, the rare earth industry will enter a stage of high-quality development under the “double carbon” goal. The strong demand for permanent magnet materials has also led many companies to join the investment and expansion of the rare earth permanent magnet industry chain. Enterprises are setting off a new round of investment boom. Among them, enterprises that master core technologies and can provide high-quality products are expected to gain a larger market share.
Permanent magnet “faucet” opens up growth space
Among these rare earth enterprises that have increased production capacity, there is Shenghe Resources, the “leader” of rare earth permanent magnets. Shenghe Resources recently announced that it plans to sign the “Mianyang Rare Earth Permanent Magnet New Material Project Investment Agreement” with Juxing Group, etc., and invest in the establishment of Juxing New Materials Co., Ltd. to invest in high-performance NdFeB permanent magnet material projects. The registered capital of the target company is 816 million yuan, and the company plans to invest 81.6 million yuan in cash to subscribe for 10% of the equity of the target company.
It is understood that Shenghe Resources is a world-class enterprise in the R&D, production and supply of rare earth and related products, and is a mixed-ownership enterprise advocated by the state and unique in the rare earth industry. The company is mainly engaged in rare earth ore mining, smelting and separation, metal processing and zirconium-titanium beneficiation. The main products include rare earth concentrates, rare earth oxides, rare earth salts, rare earth metals, monazite, zircon sand, titanium concentrates, rutile, etc. .
Shenghe Resources is the only listed rare earth company in China with a strategic layout at home and abroad. It has a relatively complete systematic industrial chain covering several major links such as mining, metal smelting and separation processing, and rare earth waste recycling. At present, the company’s rare earth business has formed a relatively complete industrial chain from mining, smelting and separation to deep processing, realizing a dual layout at home and abroad.
In recent years, Shenghe Resources’ rare earth business has been at the forefront of the industry in domestic business scale, and it is one of the rare rare earth enterprises in China that integrates north and south (light and heavy) rare earth business. The company currently has a rare earth smelting and separation capacity of about 15,000 tons. Among them, Leshan Shenghe in Sichuan base has about 8,000 tons, using light rare earth ore as the main raw material; Jiangxi base, Chenguang rare earth, has about 7,000 tons, using southern ionic rare earth ore, monazite chloride flakes, NdFeB and phosphor waste as main raw materials .
In addition, Shenghe Resources is currently promoting the construction of a new rare earth smelting and separation production base in Lianyungang City, Jiangsu Province. The Lianyungang rare earth separation project will increase the production capacity by at least 5,000 tons. In addition to the smelting and separation projects under its own control, the company also has shares in two companies, Guangxi Yu Xiaoxijun, which has a 5,000-ton/year rare earth smelting and separation capacity, and Hengyang Gudao New Materials, a 5,000-ton rare earth chloride project. It constitutes an important supplement to the company’s industrial chain.
In foreign countries, Shenghe Resources has basically formed the industrial layout of rare earth ore, smelting separation and metal processing through holding acquisitions, equity participation, cooperation and other methods, and has established a good reputation in the industry. At present, Shenghe Resources owns 10% of the preferred shares of the Mountain Pass mine in the United States. The mine’s annual rare earth output has exceeded 30,000 tons of REO (rare earth oxides), making it the largest rare earth mine outside China.
In addition, on a global scale, Shenghe Resources also successfully renewed the underwriting agreement with MP Company of the United States in early 2022, and expanded the scope of cooperation to other products except rare earth concentrates. In addition, the company also participated in the Australian Greenland Company and Peak Rare Earth Company, and became the largest shareholder of the latter.
The research report of Minsheng Securities believes that Shenghe Resources mainly obtains mining rights indirectly through trusteeship and equity participation. The company conducts a global layout of rare earth resources and masters the sources of rare earth ore from multiple channels. Since overseas imported rare earth ores do not occupy indicators, the company The advantages of overseas resources are obvious and increasing year by year. With the increasingly diversified global supply of rare earths, the company is expected to usher in a broad space for growth in the future.Return to Sohu, see more
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