Recently, China Northern Rare Earth successfully built and put into operation a demonstration line for mass-producing rare earth giant magnetostrictive materials, solving the challenge of mass-producing high-end rare earth giant magnetostrictive materials in one stroke, and helping the rare earth industry advance from traditional raw material supply to high-end core application fields such as aerospace, deep-sea exploration, and precision braking.

China Northern Rare Earth disclosed its 2025 annual report on April 18, which stated: 2025 was a pivotal year for the reshaping of the global rare earth industry landscape, a pivotal year for the strategic elevation of China's rare earth industry, and a pivotal year for the company to achieve historic breakthroughs in its business development. Over the past year, the company implemented national industrial policies and enhanced its capacity to serve national strategies. Production of major products hit record highs , with operating revenue reaching 42.563 billion yuan, up 29.11% YoY; net profit attributable to shareholders of the publicly listed firm reaching 2.251 billion yuan, up 124.17% YoY. The company maintained its industry-leading position in revenue, profit, output value, and market capitalization, successfully concluding the "14th Five-Year Plan" period. It effectively safeguarded the security and stability of China's rare earth industry chain and supply chain, and elevated China's rare earth industry to a new level of high-quality development. The explanation of operating revenue changes disclosed in China Northern Rare Earth's announcement stated: In 2025, amid an overall rise in rare earth market prices, the company seized market opportunities and coordinated the advancement of the "Five Unifications" scientific production model. Production and sales of major products, including smelting and separation products, rare earth metals, rare earth new materials, and rare earth permanent magnet motors, all achieved YoY growth. The main business disclosed in China Northern Rare Earth's 2025 annual report stated: Adhering to the development philosophy of "optimizing and expanding rare earth raw materials, refining and strengthening rare earth new materials, and specializing and differentiating end-use application products," the company is capable of producing 11 major categories, over 100 varieties, and more than 1,000 specifications of rare earth products. The company's products are mainly divided into rare earth raw material products, rare earth new material products, and rare earth end-use application products. Among them, the company's rare earth raw material products include rare earth salts, rare earth oxides, and rare earth metals, which serve as the primary raw materials for downstream rare earth new material and new material product processing enterprises. Rare earth new material products include rare earth magnetic materials, polishing materials, hydrogen storage materials, catalytic materials, and rare earth alloys. The company's rare earth end-use application products mainly include rare earth permanent magnet high-efficiency energy-saving motors, solid-state hydrogen storage cylinders, and hydrogen-powered two-wheelers. Regarding the business plan for 2026, China Northern Rare Earth stated in its 2025 annual report: 2026 is the opening year of the "15th Five-Year Plan" period and a critical year for the company to advance high-quality development and accelerate its transformation into a world-class leading rare earth enterprise. The company will adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, take forging a strong sense of community for the Chinese nation as the main theme, fully implement the spirit of the 20th National Congress of the Communist Party of China and its successive plenary sessions, implement the spirit of General Secretary Xi Jinping's important speeches and instructions on Inner Mongolia and the rare earth industry, as well as the decisions and deployments of the Inner Mongolia Autonomous Region, Baotou Municipality, and other higher-level authorities. The company will maintain the general principle of seeking progress while ensuring stability, fully and accurately implement the new development philosophy, shoulder its responsibilities and mission, steadily improve operational quality and efficiency, build a comprehensive all-element and all-category industrial system, promote the deep integration of technological innovation and industrial innovation, accelerate the pace of deepening reform, enhance the level of modern governance, continuously strengthen core functions and enhance core competitiveness, accelerate the building of a world-class leading rare earth enterprise, achieve a good start for the "15th Five-Year Plan" period, and make new and greater contributions to the construction of the "two rare earth bases." Key production and operating targets for 2026 (these targets are planning targets only; whether they can ultimately be achieved is subject to uncertainty and do not constitute substantive commitments by the Company to investors; investors and relevant parties should maintain sufficient risk awareness and understand the differences between plans, forecasts, and commitments): achieve operating revenue of over 44 billion yuan and total profit of over 3.5 billion yuan. On the premise of meeting operating targets, ensure that employee income moves in tandem with the enterprise's economic performance and labor productivity. Centering on the work targets, the following key initiatives will be carried out: 1. Stabilize production, promote sales, and improve quality and efficiency, demonstrating a new outlook of a strong start. Based on the national rare earth total volume control indicators, organize and arrange production schedules scientifically. Make every effort to ensure stable and high output from Phase I of the green smelting upgrade and renovation project. Enhance the capability of full-element rare earth extraction and separation. Optimize rare earth metal production processes to improve product quality and capacity scale. Release newly added magnetic material alloy capacity, with per-mt product costs reaching industry-leading levels. The polishing segment will leverage resource and capacity advantages, implement transformation toward high-end and precision products, and enhance product competitiveness. Rare earth additives will focus on high value-added product development to ensure stable product supply. Monitor mainstream product price trends and maintain market stability. Achieve production-sales balance for rare earth lanthanum-cerium products while actively digesting inventories. Strengthen procurement and sales channel development for rare earth Pr-Nd products to enhance market control. The functional materials segment will seize policy and market opportunities to secure orders. Rare earth permanent magnet motors will target frontier fields to achieve new breakthroughs in sales. Refine cost management and implement comprehensive measures to deepen cost reduction, quality improvement, and efficiency enhancement. Optimize financing methods to provide low-cost funding support for the Company's development. 2. Optimize layout and add momentum, shaping new advantages in industrial development. Efficiently advance the construction of key projects and accelerate the construction of Phase II of the green smelting upgrade and renovation project. Promote the Northern Jinlong separation production line to achieve trial production within the year. Promote stable and smooth production at the Jinmeng rare earth secondary resource project. Build a full-category industrial system and accelerate the implementation of joint venture and cooperation projects. Promote stable production and full production at the Northern Magnetic Material digital green technology empowerment project, and expand segmented application fields of rare earth permanent magnet materials. Strengthen the promotion and application of solid-state hydrogen storage materials and expand new applications in the rare earth catalysis field. Enhance the level of digital and intelligent management, deepen the construction of information management and control systems, continue to advance the in-depth application of business systems such as human resources, discipline inspection, and engineering projects, and further consolidate the digital form of business operations. Build a procurement-sales collaborative management platform to form a closed-loop business process covering "procurement, production, inventory, sales, and finance," achieving business-finance integration. Advance the construction of green smelting smart factories, progressively cultivate major production units to build smart factories, and continuously improve the CNC rate of key processes and the digitalization rate of production equipment. 3. Coordinating internal and external efforts to tackle key challenges, empowering innovation to seek new breakthroughs. Increase high-quality scientific and technological supply and strengthen R&D investment intensity. Focus on project deployment and research breakthroughs in areas such as cost reduction in smelting and separation, quality improvement in metal electrolysis, development of new rare earth materials, and expansion of new rare earth applications, developing new products, new processes, and new equipment. Conduct high-value patent cultivation and standards development and revision in key areas across the entire industry chain. Improve the "1+2+N+4" rare earth industry technology innovation platform system, launch high-level rare earth innovation platform projects, and comprehensively optimize and integrate technology innovation resources. Further leverage the role of the industrial transformation center, streamline the pathway for commercializing research outcomes, and enhance the quality and efficiency of technology transfer. Deepen the integration of industry, academia, and research, and promote the establishment of joint laboratories with renowned universities in China. Carry out "Three Firsts" application work in areas such as NdFeB alloy production equipment, rare earth permanent magnet motors, rare earth polishing fluids, and rare earth functional additives, and achieve substantive results. Further leverage the functions of the company's collaborative innovation centers across various industrial sectors, strengthen resource coordination and centralized management, and implement organized research. Focus on tackling key common technologies, promote close interaction and coordinated development among subsidiaries, and drive the output and transfer incubation of major scientific and technological achievements. Introduce the technology readiness level evaluation system into the entire R&D management process to establish quantitative assessment channels. Continue to strengthen the recruitment and cultivation of scientific and technological talent, providing full support in terms of compensation, research funding, and living benefits. 4. Deepening and substantiating reforms to stimulate new vitality in enterprise development. Enhance the company's management and control effectiveness, improve the board of directors' construction and authorization system, explore the formulation of management systems for the performance of duties by full-time and part-time chairpersons, and elevate the board's standardized performance and scientific decision-making capabilities. Optimize the company's management and control matters, processes, and authorities to improve decision-making efficiency. Promote the optimization and integration of subsidiaries. Implement the requirements of the "doubling" initiative for specialized, refined, distinctive, and innovative enterprises, and cultivate additional such enterprises. Deepen the reform of the three systems, improve the cadre assessment and evaluation system, and strengthen the rigid implementation of assessment results. Optimize the selection and appointment mechanism, intensify competitive recruitment and market-oriented hiring, implement "3+6" contract-based management, and firmly establish a talent selection orientation that prioritizes actual performance and practical contributions. Closely align with the company's development and actual business needs, scientifically evaluate organizational structures, reasonably reduce management layers, and enhance management effectiveness. Leverage new projects and production lines to establish shared employment mechanisms, promoting dynamic position integration and workforce optimization. Deepen the reform of the compensation distribution system, build a "same-level, broad-grade" compensation system based on position value and performance contributions, strengthen the linkage between subsidiary performance and the company's overall profitability, and drive a close connection between employee income and enterprise profitability as well as individual contributions. 5. Striving for Excellence in Management to Elevate Modern Governance to New Heights. Strengthened strategic security management, enhanced information resource integration, and actively participated in the formulation of national industrial policies. Strengthened financial management by rigorously implementing comprehensive budget management, further reinforcing capital control, and establishing a capital risk prevention and control system. Enhanced financial informatization by building a standardized, efficient, and well-adapted financial shared services system. Strengthened risk and compliance management by improving the compliance management system to ensure that business development and compliance management advanced in tandem. Established a legal affairs shared system to reduce legal service costs for subsidiaries and strengthen the company's overall legal risk prevention and control capabilities. Improved the comprehensive risk management system and optimized risk management across the entire process of strategy, operations, and management. Strengthened safety and environmental protection management, guided by the "10000" safety vision, to enhance intrinsic safety levels. Effectively carried out safety management of relevant parties. Rigorously implemented environmental protection accountability, improved integrated traceability management of solid waste across production, sales, transportation, and utilization, and enhanced emergency response capabilities. Strengthened talent management by reinforcing training and empowerment, implementing targeted training by level and category, and improving the competency of key personnel. Deepened specialized cultivation of high-level talent and strengthened the deep integration of talent development with the company's strategic growth. Innovated the training model for industrial workers, built a platform for skills inheritance and innovation, simultaneously consolidated talent reserves, optimized talent structure, and enhanced talent effectiveness. Strengthened market capitalization management by establishing a scientific market capitalization management philosophy, improving the ESG management system, and comprehensively leveraging measures such as information disclosure, investor relations management, cash dividends, mergers and acquisitions, and ESG on the basis of enhancing the company's value creation capabilities, to improve market capitalization management performance and maintain the company's position as the largest by market capitalization in the rare earth industry. When discussing potential risks, China Northern Rare Earth mentioned product price risk: Affected by internal and external factors such as macro economic conditions, cyclical industry fluctuations, changes in rare earth market supply and demand, intensified market competition, and geopolitical disruptions, prices of major rare earth products may fluctuate and decline, posing product price risk. Countermeasures: The company will closely monitor market conditions, strengthen market forecasting and analysis, innovate marketing models, adjust marketing strategies, improve product quality, vigorously expand markets, and increase product market share. While maintaining and expanding the marketing base for Pr-Nd products, the company will intensify marketing efforts for La-Ce products, optimize service quality, and improve client satisfaction. Leveraging the role of a major rare earth group, the company will stabilize confidence, stabilize expectations, and stabilize market operations, adopting comprehensive measures to overcome unfavourable factors and striving to mitigate the impact of product price risk on the company's operating performance. Looking back at the SMM Pr-Nd oxide price trend in 2025: the average price of Pr-Nd oxide on December 31, 2025 was 606,500 yuan/mt, compared with the average price of 398,000 yuan/mt on December 31, 2024, representing an increase of 52.39% in 2025. In comparison, the annual daily average price of Pr-Nd oxide in 2025 was 491,576.13 yuan/mt versus 391,871.9 yuan/mt in 2024, indicating a YoY increase of 25.45% in the daily average price in 2025. Driven by expectations of supply reduction due to partial shutdowns at separation plants, upstream suppliers raised their quotes rapidly, low-priced spot cargo in the market tightened quickly, pushing rare earth prices up for three consecutive days. According to SMM pricing, on April 20, the price of Pr-Nd oxide was 815,000-818,000 yuan/mt, with an average price of 816,500 yuan/mt, up 1.74% from the previous trading day. As the price of Pr-Nd oxide rose, wait-and-see sentiment in the market intensified, while downstream magnetic material enterprises had limited acceptance of high-priced metals, and purchasing enthusiasm declined. In the short term, supported by strong confidence among upstream suppliers to hold prices firm, Pr-Nd product prices are expected to hover at highs. For more information on rare earth fundamentals, technical aspects, and policy developments, please attend the ~ SMM Rare Earth Forum Contact: Wang Haiqiao Contact: 19818727891

On October 16, the Industry and Information Technology Bureau of Baotou City organized a special meeting on the rare earth industry, attended by the industry and information technology bureaus of its banners, counties, and districts, the Rare Earth Industrial Park Management Office of the Rare Earth High-Tech Zone, Baotou Steel Group, and China Northern Rare Earth. The meeting thoroughly conveyed and studied the spirit of the October 9 session of the municipal party committee’s leading group for the construction of the "Two Rare Earth Bases," and arranged and deployed key tasks for the next phase. The meeting emphasized that all regions must thoroughly implement the important directives of the municipal party committee, scientifically research and determine the development goals for the rare earth industry during the 15th Five-Year Plan period, continuously expand the application fields of rare earths, promote investment attraction, project planning, reserve, and construction in a list-based manner, and accelerate the gathering and cultivation of more influential high-quality enterprises. Baotou Steel Group and China Northern Rare Earth should give full play to the leading role of leading enterprises, optimize industrial layout and project spatial layout, and jointly advance the construction of Baotou’s "Two Rare Earth Bases" to a new level.

According to the preliminary estimate by the company's finance department as disclosed in China Northern Rare Earth's pre-announcement of estimated earnings growth for the first three quarters of 2025 released on the evening of October 10, the net profit attributable to owners of the parent company for the first three quarters of 2025 is expected to be between 1.51 billion yuan and 1.57 billion yuan, an increase of 1.105 billion yuan to 1.165 billion yuan compared with the same period last year (statutory disclosure data), up 272.54% to 287.34% YoY. The net profit attributable to owners of the parent company after deducting non-recurring gains and losses for the first three quarters of 2025 is expected to be between 1.33 billion yuan and 1.39 billion yuan, an increase of 1.064 billion yuan to 1.124 billion yuan compared with the same period last year (statutory disclosure data), up 399.90% to 422.46% YoY. Regarding the main reasons for the estimated earnings growth in this period, China Northern Rare Earth stated: From January to September 2025, facing a complex and evolving environment, the company effectively grasped the rhythm of market changes, adhered to its strategic plan, anchored its annual production and operation targets, strengthened comprehensive budget management, deepened cost reduction, quality improvement, and efficiency enhancement, scientifically coordinated production organization and scheduling, enhanced market analysis and forecasting, intensified marketing operations to seize market opportunities, accelerated key project construction, promoted scientific research and management innovation, strengthened performance-based incentives and constraints, and fully leveraged the stable domestic demand structure and advantages. By implementing coordinated measures across all aspects of production and operation management, focusing on "strengthening core competencies" to consolidate competitive advantages, addressing "weaknesses" to fill development gaps, "improving quality" to solidify the development foundation, and "promoting development" to activate growth momentum, the company laid a solid foundation and provided strong support for achieving a substantial year-on-year increase in operating performance. In terms of production and marketing, the company adhered to the green development concept and the quality philosophy of "users first, brand foremost," coordinated and advanced the scientific production organization model of the "Five Unifications" (unified development planning, unified technology sharing, unified production planning, unified raw material supply, unified coordinated maintenance), strengthened production system management, promoted product structure adjustment and process technology upgrades, continuously optimized the product mix, and advanced to meet market demand for high value-added products such as specialized, customized, and unique products. It conducted multi-dimensional benchmarking management horizontally and vertically, strengthened full cost benchmarking upgrades for processing, leading to a year-on-year reduction in the full cost of rare earth processing. The company made every effort to ensure the supply of raw materials and products, guided by market demand, deepened marketing model innovation, intensified marketing operations, and took multiple measures to actively digest inventories. The production and sales of major products, including smelting and separation, rare earth metals, rare earth functional materials, and permanent magnet motors, achieved varying degrees of growth year-on-year. providing energy-saving and carbon-reducing rare earth material options for the development of new energy. Key Project Construction, comprehensively consolidated scale advantages, accelerated the advancement of key projects, with Phase I of the new-generation rare earth green mining, beneficiation, and smelting upgrade project entering the final stage of production line linkage debugging, and Phase II commencing construction and progressing rapidly; industry chain M&A reorganization, joint ventures, cooperation, and other capital operation projects for extending, supplementing, and strengthening the chain were efficiently advanced. R&D and Innovation, continuously honed scientific research strengths, achieved abundant scientific and technological innovation results, organized applications for 20 national-level projects and 25 autonomous region-level projects. Undertook and participated in 5 national-level projects and 35 autonomous region-level projects, formulated and revised 49 various standards, applied for 145 patents, and continuously enhanced the level of service to major national and regional scientific and technological strategies. Strengthened technological R&D, promoted iterative upgrades in the company's process technology and equipment manufacturing capabilities. China Northern Rare Earth announced on the evening of October 10: According to the rare earth concentrate pricing method and the Q3 2025 rare earth oxide prices, after calculation and approval at the company's 15th General Manager Office Meeting of 2025, the Q4 2025 rare earth concentrate transaction price is adjusted to tax-excluded 26,205 yuan/mt (dry basis, REO=50%), with the tax-excluded price increasing or decreasing by 524.1 yuan/mt for every 1% increase or decrease in REO. The price of 26,205 yuan/mt represents an increase of 7,096 yuan/mt compared to the Q3 2025 rare earth concentrate transaction price of 19,109 yuan/mt, up 37.13% QoQ. The rare earth concentrate prices for Baotou Steel and China Northern Rare Earth increased significantly QoQ in Q4, continuing the upward trend from the first three quarters of this year, meaning the transaction prices have been climbing steadily throughout the year! In Q1, the prices rose 4.7% QoQ, in Q2 they rose 1.11% QoQ, in Q3 they rose 1.5% QoQ, and in Q4 they rose 37.13% QoQ. Reviewing the changes in the rare earth concentrate transaction prices for Baotou Steel and China Northern Rare Earth in 2024 shows a slight increase QoQ in Q1 2024, a noticeable decrease QoQ in Q2 2024, a slight decrease QoQ in Q3 2024, nearly flat, and an increase QoQ in Q4 2024. China Northern Rare Earth's Investor Relations Activity Record (September 2025) announced on October 9 shows: Q: How does the company view the future price and market outlook for rare earths? China Northern Rare Earth responded: In response to the national goals of "carbon peak by 2030 and carbon neutrality by 2060," driven by the new demands of building a new-type power system dominated by new energy and energy conservation and emission reduction, related technologies represented by permanent magnet synchronous technology will, in certain fields, drive the demand of the rare earth industry to become mainstream. In recent years, against the backdrop of green and low-carbon development and the "electrification of everything," the demand for magnetic materials has increased by about 10%, and this trend is expected to continue through 2025. The rapid development of emerging fields such as wind power, NEVs, humanoid robots, and the low-altitude economy provides strong support for downstream demand growth. Additionally, mobile phone covers, semiconductors, and chips will drive the development of the downstream polishing powder industry; hydrogen storage will see new increments under the development of ESS; and permanent magnet motors will experience significant growth driven by the program of large-scale equipment upgrades and consumer goods trade-ins and the implementation of major national strategies and build up security capacity in key areas. Therefore, the company holds an optimistic attitude towards the future growth of downstream demand in the rare earth industry. Product prices are mainly influenced by the supply-demand relationship. Since the beginning of this year, prices of major products such as Pr-Nd have remained stable. Although market orders and product prices were impacted by factors such as international trade during this period, stable domestic demand has provided strong support for the rare earth market, with overall market activity being better than the same period last year. Recently, affected by expectations and with the continuous recovery of producer orders, prices of mainstream rare earth products have continued to rise with minor fluctuations. Q: Does the company have any plans for refinancing and mergers and acquisitions? China Northern Rare Earth responded: The company's 2024 annual general meeting of shareholders reviewed and passed the "Proposal on Applying for Registration and Issuance of Non-Financial Enterprise Debt Financing Instruments in the Interbank Bond Market." To meet the company's operational development funding needs, optimize its debt structure, reduce financial expenses, and provide low-cost funding support for the company's high-quality development, the company plans to apply to the National Association of Financial Market Institutional Investors for the registration and issuance of non-financial enterprise debt financing instruments in the interbank bond market, with a total amount not exceeding 2.5 billion yuan. The issuance varieties include medium-term notes, short-term financing bills, and super short-term commercial papers. Various tasks for this debt financing project are progressing in an orderly manner. Regarding mergers and acquisitions, in recent years, the company established Antai North through a joint venture with Advanced Technology & Materials Co., Ltd., completing a 5,000 mt/year rare earth permanent magnets industrialisation project; the acquisition and restructuring of Baotou Zhongxin Antai provided a beneficial supplement for the company's production of single lanthanum and single cerium metals; the establishment of Northern Zhaobao with Ningbo Zhaobao Magnet Industry Co., Ltd., Suzhou Tongrun Drive Co., Ltd., and Ningbo Xici Technology Co., Ltd. implements a 3,000 mt/year high-performance NdFeB magnetic material project, further meeting the magnetic material demands of high-end permanent magnet motors, robots, intelligent equipment, and other fields; and the establishment of Northern Jinlong with the company's associate company, Jinlong Rare Earth, involves the construction of a 5,000 mt rare earth oxide separation production line project, which has passed the anti-monopoly review for the concentration of operators by the State Administration for Market Regulation, completed industrial and commercial registration, obtained a business license, and is advancing the project construction. Going forward, the company will leverage merger and acquisition policies, and respond accordingly based on industry trends, market changes, customer needs, and industrial planning. It will extend, supplement, and strengthen the industry chain through capital operations such as mergers, acquisitions, and joint ventures, enhancing the value creation and high-quality development level of the industry chain, thereby creating greater value for the company and its shareholders. Q: What is the company's outlook for Q3 and Q4 2025? China Northern Rare Earth responded: Since the beginning of this year, prices of major rare earth products have risen steadily. Seizing the favorable market opportunity, the company actively adjusted its strategies and strengthened cost reduction, quality improvement, and efficiency enhancement to boost operating performance. In July and August, production and sales of key products were strong, and production costs further decreased. For Q3 and Q4 performance, please refer to the company’s subsequent periodic reports. Q: Have there been any changes to the export policies for medium-heavy rare earths? What is the company’s export situation, and has it been affected? China Northern Rare Earth responded: The export control policies for rare earth products introduced by the state aim to regulate rare earth exports in compliance with regulations and fulfill national security obligations. The company firmly supports and implements all state policies and measures. Since late April, some rare earth enterprises have successively applied for export licenses. The export controls mainly focus on licensing the export of dual-use items with medium-heavy rare earth attributes, covering seven medium-heavy rare earth elements including dysprosium and terbium. These require applying for dual-use item export licenses, with clear end-users and end-uses. Currently, lanthanum and cerium product exports proceed normally, while exports of the seven medium-heavy rare earth elements, including dysprosium and terbium, are carried out in accordance with control measures. The company primarily exports light rare earth products, which currently account for a relatively small proportion of total sales and overall revenue, so the impact of export controls is relatively limited. Q: How is the development of the company’s magnetic materials? China Northern Rare Earth responded: Looking ahead to the "16th Five-Year Plan" period, the company will base its efforts on expanding, optimizing, and strengthening the rapid-solidification alloy industry, and diversify and develop multiple varieties of rare earth permanent magnet materials. In magnetic material alloys, the company will further increase the production scale of rapid-solidification alloys, synergizing process optimization, equipment upgrades, and process control to continuously improve product quality and production efficiency, optimize cost management, and solidify its leading position in the NdFeB rapid-solidification alloy sector. The company currently has an annual capacity of 100,000 mt for magnetic material alloys. To further enhance industrial competitiveness, its subsidiary Northern Magnetic Materials has begun construction on a 50,000 mt high-performance NdFeB rapid-solidification alloy project. Upon completion, the project will add an annual production capacity of 50,000 mt of magnetic material alloy and 10,000 mt of hydrogen-decrepitated powder, establishing the largest single-unit capacity, optimal comprehensive cost efficiency, and most market-competitive rare earth magnetic material alloy (powder) production plant, as well as a quality-leading new energy supporting magnetic material facility. On the magnet side, the company is pursuing a differentiated and diversified layout in the downstream sectors of magnetic materials, building multi-product advantages across the entire industry chain, and enhancing the overall competitiveness of the rare earth magnetic materials segment. The company is accelerating capacity construction and technological upgrades. Through its joint venture Antai North, established with subsidiaries Northern Magnetic Material and Antai Technology, a 5,000 mt/year rare earth permanent magnet industrialisation project has been completed. In partnership with Ningbo Zhaobao Magnetic Industry, Suzhou Tongrun Drive, and Ningbo Xici Technology, the company co-established Northern Zhaobao to implement a 3,000 mt/year high-performance NdFeB magnetic material project, further meeting the magnetic material demands of high-end permanent magnet motors, robotics, intelligent equipment, and other fields. Q: What is the pricing mechanism for rare earth concentrate transactions between the company and Baogang United Steel? China Northern Rare Earth responded: The pricing mechanism for rare earth concentrate transactions between the company and Baogang United Steel is implemented in accordance with the "Proposal on the Pricing Mechanism for Daily Related-Party Transactions of Rare Earth Concentrate and Its Execution in 2022 and Estimates for 2023," passed at the company's first interim shareholders' meeting in 2023. Specifically, starting from April 1, 2023, with the rare earth concentrate pricing formula remaining unchanged, the company calculates and adjusts the rare earth concentrate price in the first ten days of each quarter's first month, then re-signs the rare earth concentrate supply contract or supplementary agreement and issues an announcement. Currently, this pricing mechanism is operating stably. Q: What are the downstream applications of rare earth lanthanum and cerium? China Northern Rare Earth responded: Due to their unique electron shell structures and favorable physical and chemical properties, lanthanum and cerium elements are widely used in polishing materials, hydrogen storage materials, cerium-iron-boron (Ce-Fe-B) permanent magnet materials, optical functional materials, catalytic materials, and other fields. In recent years, China Northern Rare Earth has intensified research on the expansion of lanthanum and cerium applications, achieving breakthroughs in areas such as polymer material additives, functional coatings, antibacterial materials, functional ceramic materials, functional textile materials, refractory materials, and functional glass. The company has developed a series of new materials and products, effectively promoting the balanced utilization of lanthanum and cerium rare earth resources. A Huaan Securities research report on China Northern Rare Earth dated September 3 pointed out: The production and sales of the company's various products increased significantly YoY. In Q2 2025, the company's material production and sales showed notable growth. Leveraging its resource advantages, the company is actively developing rare earth functional materials. Capitalizing on its rare earth resource strengths and using capital as a link, the company is expanding its rare earth functional materials industry—including magnetic materials, polishing materials, and hydrogen storage materials—through mergers and acquisitions, wholly-owned establishments, and joint ventures. The company develops, produces, and sells rare earth functional material products within their respective industrial fields by procuring and processing rare earth raw material products. Leveraging its resource characteristics and industrial layout, the company has established an end-use application structure centered on magnetic materials and rare earth permanent magnet motors. Risk warnings: The company's new capacity construction may fall short of expectations; raw material price fluctuations may exceed expectations; industry competition may intensify. A Guosen Securities research report commenting on China Northern Rare Earth's semi-annual report on September 1 stated that profitability rebounded significantly, while the period expense ratio remained stable with a slight decrease. Production of multiple product categories reached record highs, and procurement volume of rare earth concentrate from Baotou Steel remained basically flat YoY. In H1 2025, the company's rare earth oxide production was 15,200 mt, up 111.20% YoY; rare earth salt production was 71,100 mt, down 1.32% YoY; rare earth metal production was 24,100 mt, up 28.10% YoY; rare earth functional material production increased 16.65% YoY, with magnetic material performance being particularly notable—production reached 34,600 mt (up 24.13% YoY) and sales reached 34,700 mt (up 25.39% YoY). The rare earth concentrate required for the company's production is primarily procured from related party Bao Gang United Steel. In H1 2025, the transaction value for rare earth concentrate procured from Bao Gang United Steel was 4.335 billion yuan, with an agreed price of 18,716 yuan/mt. The transaction volume converted to REO was 115,800 mt, basically flat YoY compared to 116,400 mt in the same period last year, but down 4% MoM. The company accelerated key project construction, with multiple metal and magnetic material projects progressing orderly. The company's Huaxing Rare Earth 8,000 mt metal project and Gansu Rare Earth 12,000 mt metal project have been gradually put into operation; the Northern Magnetic Materials 50,000 mt magnetic material alloy project has commenced construction; the Northern Zhaobao 3,000 mt magnet project has started construction; efforts are underway to complete Phase I of the Tianjiao Qingmei 9,000 mt polishing powder expansion project and proceed with Phase II commissioning and acceptance. Risk warnings: Growth in magnetic material demand may fall short of expectations; rare earth prices may fluctuate significantly; concentrate prices may rise substantially; the growth rate of the company's mining quotas may fall short of expectations.

I. Policy Review: Hydrogen Policy Updates (A) Domestic Policies Chongqing: Released the "Draft Development Plan for Hydrogen Refueling Stations in Chongqing (2025-2035)" for public comments. According to the draft, it is predicted that the promotion of hydrogen fuel cell vehicles in Chongqing will reach 800 units by 2027, 2,000 units by 2030, and 4,000 units by 2035. Meanwhile, efforts are being made to actively promote the construction of cross-regional hydrogen corridors such as the "Chengdu-Chongqing Hydrogen Corridor" and the "Western Land-Sea New Passage Hydrogen Corridor," while gradually expanding hydrogen application scenarios in key areas including western Chongqing, eastern new towns, southeastern Wuling mountainous areas, and northeastern Three Gorges Reservoir area. Based on application scenarios such as highways, ports, logistics parks, and industrial parks, combined with the growth trend and estimated ownership of hydrogen fuel cell vehicles, the demand for hydrogen refueling capacity is forecasted as follows: 0.4 thousand mt/year in 2027, 1.1 thousand mt/year in 2030, and 2.5 thousand mt/year in 2035 for regions like the Chengdu-Chongqing Hydrogen Corridor and the Western Land-Sea New Passage Hydrogen Corridor. Panzhihua City, Sichuan Province: Issued the "Several Measures to Support High-Quality Development of the Hydrogen Industry," which states that up to 5 million yuan in financial rewards will be given for the construction and operation of hydrogen refueling stations, green hydrogen production, promotion of hydrogen fuel cell vehicles, equipment manufacturing, and technological innovation, along with simplified approval procedures to promote the full-chain development of the hydrogen industry. Jiujiang City, Jiangxi Province: Published the "Several Measures for Further Supporting High-Quality Development of the Hydrogen Industry in Jiujiang." The document indicates that Jiujiang has introduced a special policy (trial) for the hydrogen industry, providing financial support across the entire chain from business settlement to application scenarios and facility construction: For manufacturing enterprises purchasing hydrogen-related equipment worth over 10 million yuan, a reward of up to 3 million yuan at an 8% rate is provided, with projects exceeding 100 million yuan subject to "case-by-case negotiation"; Enterprises achieving their first annual revenue milestones of 20 million yuan, 100 million yuan, and 500 million yuan will receive tiered rewards ranging from 100,000 to 5 million yuan. On the application side, subsidies for purchasing hydrogen fuel cell buses and logistics vehicles are 3,000 yuan/kW, with operational subsidies for vehicles within the city ranging from 50,000 yuan/10,000 km for light-duty to 100,000 yuan/10,000 km for medium and heavy-duty, with a maximum annual subsidy of 3 million yuan per company; Subsidies for purchasing hydrogen-powered ships vary based on power, with a maximum single-ship subsidy of 2 million yuan, and operational subsidies ranging from 80,000 to 120,000 yuan/year. In the industrial sector, the purification of by-product hydrogen is encouraged, and projects such as hydrogen metallurgy and hydrogen blending in power generation are supported, promoting the green hydrogen demonstration in Lianxi District. Regarding infrastructure, oil-hydrogen co-construction stations and integrated hydrogen production-refueling stations with daily hydrogen refueling capacity over 500 kg will receive a 1 million yuan subsidy, while fixed stations will get 500,000 yuan; If the selling price at hydrogen refueling stations is below 35 yuan/kg, an additional 1 yuan/kg reward will be given for every 1 yuan reduction, with a maximum annual reward of 1 million yuan. Relaxation of road rights for hydrogen vehicles, with logistics vehicles and heavy trucks enjoying free parking and exemption from travel restrictions. The policy emphasizes "chain cultivation," covering the entire process from business establishment to technology conversion and scenario expansion, to be implemented starting 2025, aiming to build a model city for hydrogen energy applications. Tieling City, Liaoning Province: Issued the "Notice on Further Clarifying Safety Management Responsibilities in the Hydrogen Energy Sector in Tieling City." The document states that the hydrogen products referred to in this notice are those produced by electrolysis of water using renewable energy (collectively known as green hydrogen) and are not managed as hazardous chemicals when used as an energy source. Green hydrogen projects should be legally initiated, fulfilling relevant procedures concerning urban and rural planning, land use, ecological environment, resource utilization, safety production, fire control, and special equipment. It is allowed to construct green hydrogen production projects, including solar, wind, and other renewable energy-based water electrolysis, and integrated hydrogen production and refueling stations outside chemical industrial parks. Hydrogen production, storage, and refueling station construction projects are subject to filing management by county-level governments, while supporting power generation projects and grid engineering for solar, wind, and other renewable energies are subject to approval and filing according to their management authority. Green hydrogen production does not require a hazardous chemicals safety production permit. Hydrogen enterprises are supervised for safety according to their industry category. Hydrogen production from fossil fuels (gray or blue hydrogen) or industrial by-product hydrogen must obtain a hazardous chemicals safety production permit. Hydrogen enterprises should establish a safety management organization responsible for emergency management or appoint full-time safety personnel with emergency management responsibilities, clearly defining the division of responsibilities for emergency response, command, handling, rescue, and recovery, and implementing these in detail at the job level. Policy Interpretation: 1. "Chongqing Hydrogen Refueling Station Industry Development Plan (2025-2035) (Draft for Comments)" : The policy takes the "Chengdu-Chongqing Hydrogen Corridor" and the "Western Land-Sea New Passage Hydrogen Corridor" as core initiatives, constructing a hydrogen application network through cross-regional cooperation, highlighting strategic synergy. The plan specifies hydrogen refueling capacity needs for 2027-2035, promoting the construction of hydrogen refueling stations in highway service areas, ports, and other scenarios, and forming a regional hydrogen supply center based on by-product hydrogen resources in Changshou District (exceeding 1.5 billion cubic meters annually). This "demand-driven + resource integration" model can, to some extent, reduce the cost of hydrogen circulation between regions and accelerate commercialization through scenario expansion. 2 . "Several Measures to Support High-Quality Development of the Hydrogen Energy Industry" : Its highlight is the deep binding of technology conversion and industry cultivation, such as providing a 5% sales revenue reward to hydrogen equipment companies for three consecutive years, and phased rewards for whole vehicle assembly projects. This whole-chain support for "R&D - production - application" helps quickly establish a localized industry chain. 3. Notice on Further Clarifying the Responsibilities for Safety Management in the Hydrogen Energy Sector in Tieling City: It clarifies the subsidy standards for multiple scenarios. This stimulus policy package of "application scenarios + operational subsidies" can effectively reduce the end-user's costs. 4. Notice on Further Clarifying the Responsibilities for Safety Management in the Hydrogen Energy Sector in Tieling City: The policy clarifies for the first time that green hydrogen (hydrogen produced from renewable energy) is not managed as a hazardous chemical, allowing the construction of integrated hydrogen production and refueling stations outside chemical parks and simplifying the filing process. This "categorized supervision" model not only reduces the compliance costs for green hydrogen projects but also improves the approval efficiency through county-level filing management. Its significance lies in unleashing the potential of green hydrogen development through policy relaxation, especially aligning with the inherent advantages of Northeast China's abundant wind and solar power resources. (II) Foreign Policies European Commission: It issued a document titled "Methodology for Accounting Greenhouse Gas Emission Reductions from Low-Carbon Fuels," which clarifies for the first time the calculation formulas and certification standards for emission intensities of low-carbon fuels (excluding renewable carbon fuels), including low-carbon hydrogen.​​ European Union: Guided by the European Green Deal and the European Climate Law, the EU has introduced a series of carbon reduction policies. Among them, the FuelEU Maritime (FEU) regulation will be formally implemented in 2025, promoting the accelerated use of renewable fuels in the shipping industry. The Carbon Border Adjustment Mechanism (CBAM) will be implemented in 2026, imposing carbon taxes on specific imported goods. Germany: Through the National Hydrogen Strategy, Germany plans to achieve a green hydrogen production capacity of 5 GW by 2030. France: It updated the National Hydrogen Strategy. A support mechanism totaling 4 billion euros has been established to ensure the competitiveness of the low-carbon hydrogen market over the next 15 years. Adjustments include achieving a national electrolyzer installed capacity of 4.5 GW by 2030 and 8 GW by 2035; strengthening technological autonomy in the entire hydrogen industry chain; developing a low-carbon hydrogen transportation network; and ensuring the basic conditions for the development of the hydrogen energy industry. US: US President Trump signed the "Big and Beautiful" bill, which includes a two-year extension until 2028 for the commencement deadline of tax credit projects in the hydrogen energy industry. Hydrogen energy projects originally scheduled to commence before January 1, 2026, to qualify for a maximum tax credit of $3 per kg, are now extended to January 1, 2028. Policy Interpretation: 1. Fragmented Standards and Cost Challenges: The EU's "extraterritorial carbon governance" has sparked controversy: its accounting methodology excludes "renewable carbon fuels" (such as biomass-derived hydrogen), being accused of technological discrimination; the CBAM's retroactive accounting for indirect emissions (such as the carbon intensity of the power grid for electrolytic hydrogen) has led to the downgrading of a Moroccan PV hydrogen production project due to the grid's 15% coal power content. The more challenging issue is that the fluctuation of EU carbon prices (which surged to 110 euros/mt in 2023) directly impacts the cost of imported hydrogen, forcing countries like Algeria to demand long-term agreements with "carbon price linkage," a new type of trade clause that is reshaping global energy contracts. 2. Competition and Layout: China and the EU's stimulus policy package for decarbonization essentially uses standards as a weapon for industrial reshuffling. Germany's pipelines, France's electrolyzers, and US subsidies together form the "Three Kingdoms" of the hydrogen era. For China, it is necessary to accelerate compatibility with the EU's carbon footprint accounting and be vigilant against the transformation of "standard barriers" into "technological lock-in"—when the EU requires second-generation anti-hydrogen coating for hydrogen projects by 2027, the speed of technological iteration by domestic companies will determine their position in this global low-carbon competition. II. Corporate Dynamics: A Surge in Project Signings and Technological Collaborations (I) Project Intelligence Dunhuang Culture and Tourism Transportation Co., Ltd.: Dunhuang Culture and Tourism Transportation Co., Ltd. issued a tender for the procurement of hydrogen fuel cell buses. According to the tender announcement, Dunhuang Culture and Tourism Transportation Co., Ltd. plans to purchase 20 units of hydrogen fuel cell buses and provide corresponding supporting services. The budget amount is 30 million yuan, with a maximum limit of 30 million yuan. Hydrogen Capital (Inner Mongolia) Clean Energy Co., Ltd. : Hydrogen Capital (Inner Mongolia) Clean Energy Co., Ltd. received approval for its hydrogen refueling station. This hydrogen refueling station is located at No. 6 Dingxiang Road, Yingxin Street, Xincheng District, Hohhot City. The project unit is Hydrogen Capital (Inner Mongolia) Clean Energy Co., Ltd., with a total investment of 30 million yuan. The planned construction includes two dual-nozzle hydrogen dispensers (35Mpa/70Mpa), one set of compressors, two methanol dispensers, and two hydrogen storage tanks with a total volume of 1,000 kg. The total area of the project is 3 mu. The planned construction period is from Aug 2025 to Dec 2025. Wulate Zhongqi Baishun Trading Co., Ltd.: The change in the integrated vehicle oil, gas, and hydrogen refueling station in Sanggendalai Gacha, Bayinwulan Sum, Wulate Zhongqi, Inner Mongolia, has been approved. The project is located between K6538 736 meters and K6538 867 meters on G331, in Sanggendalai Gacha, Bayinwulan Sum, Wulate Zhongqi, Bayannur City. The project unit is Wulate Zhongqi Baishun Trading Co., Ltd., with a total investment of 20 million yuan. The project will be constructed in two phases. Phase one mainly includes the construction of offices, business rooms, rest areas, vehicle maintenance zones, and equipment rooms; it also includes the construction of canopies, oil and gas storage facilities, access roads, and parking lots, with a total building area of about 2,000 m². It will be equipped with one finished oil dispenser for vehicles and three LNG gas dispensers. Phase II involves the construction of hydrogen storage facilities and equipment, as well as the installation of two hydrogen refueling machines. Hydrogen Energy Operation Co., Ltd. (Foshan) of Headyson: Headyson Foshan and the South China New Energy Vehicle Industry Promotion Center in Foshan have continued their cooperation on the Nanhai "Hydrogen Vehicle Travel" hydrogen-powered passenger car promotion project. Headyson Foshan will rely on its Danzao hydrogen refueling station to provide professional hydrogen refueling equipment support and related ancillary services for the 49 70MPa hydrogen fuel cell vehicles promoted and operated by the center. (II) Corporate Updates Weichai Energy: Great Wall Motor's factory in Brazil has officially been completed and put into operation. At the event, hydrogen-powered heavy trucks equipped with Weichai Energy's core hydrogen power systems made their debut. This car model will collaborate with multiple renowned universities and institutions, including the University of São Paulo (USP) in Brazil, to officially conduct road tests and multi-scenario adaptability verification for hydrogen fuel cell trucks in the local area. Hefei Energy Research Institute and Shenzhen Haixu New Energy Co., Ltd.: The world's first demonstration ship powered by a pure ammonia fuel internal combustion engine, the "Anhui No. 1," jointly developed by the two entities, successfully completed its maiden voyage in the Chaohu Lake waters of Hefei, Anhui. This achievement opens up a new and feasible path for energy conservation, emission reduction, and green development in the shipping industry. Guochuang Hydrogen Energy: Sanitation vehicles equipped with Guochuang Hydrogen Energy's fuel cell engine system completed 30 days of uninterrupted operation in Jinpu New Area, Dalian, accumulating nearly 25,000 kilometers of cleaning mileage. This marks a stable operational phase for Dalian's hydrogen-powered sanitation equipment demonstration, laying a solid foundation for expanding the coverage of hydrogen energy vehicles in Dalian's sanitation operation scenarios. SENOHERS: SENOHERS' methanol reforming high-temperature membrane fuel cell cogeneration system has been selected for the "Beijing Energy Conservation Technology and Product Recommendation Catalog (2025 Edition)" under the category of new energy and renewable energy utilization technologies. This achievement signifies widespread recognition for methanol hydrogen energy cogeneration technology. Sinohytec and Pengfei Group: Sinohytec and Pengfei Group have signed a strategic cooperation agreement. The two parties will engage in in-depth cooperation on hydrogen fuel cell technology R&D and large-scale applications, promoting resource sharing and complementary advantages among all parties, driving the high-quality development of Lvliang's hydrogen energy industry, and jointly promoting Lvliang to become a "national hydrogen energy heavy truck manufacturing base." The first batch of signed procurements includes 100 hydrogen fuel cell heavy trucks and 250 hydrogen fuel cell logistics vehicles. Among them, the heavy trucks will be used for coking raw material transportation trunk lines, while the light trucks will serve the urban cold chain logistics network. Sinohytec will provide the core technology for the fuel cell system, and Pengfei Group will support the construction of hydrogen refueling station clusters and a digital operation platform to jointly verify the economy and reliability of hydrogen energy vehicles. Beijing Stock Exchange Group: Beijing Tianhai Hydrogen Equipment Co., Ltd. has launched an equity financing project, with the fundraising party located in Tongzhou District, Beijing; the intended amount of funds to be raised: no more than 300 million yuan; the corresponding shareholding ratio or number of shares for the intended funds: to be determined based on the best offer. China Northern Rare Earth Storage Company, Baogang Group : The first low-pressure solid-state hydrogen refueling demonstration station in Inner Mongolia has been completed. This demonstration station, independently designed and developed by China Northern Rare Earth Storage Company, can store 100 kg of hydrogen. The process equipment is simple, occupies a small area, and is easy to operate. It can be placed inside a container to achieve integrated skid-mounted integration, which is conducive to the application and commercial promotion of hydrogen energy. Trina Green Hydrogen: Its self-developed Tianqing series alkaline water electrolysis hydrogen production equipment (THDQ1000S/1.6) has successfully been included in the 2025 Jiangsu Province "Three Firsts and Two New" recognition list. Hubei Lvgzhi Hydrogen Energy Industry Innovation and Development Co., Ltd.: On August 18, Hubei Lvgzhi Hydrogen Energy Industry Innovation and Development Co., Ltd. was established with a registered capital of 1 billion yuan. The company is wholly owned by Hubei Optics Valley East Holding Group Co., Ltd. III. Technological Advancements: Breakthroughs in Efficiency and Cost (I) In the Production, Storage, and Transportation Sectors Shougang Group Co., Ltd.: Successfully developed a full series of hydrogen transmission pipeline steels (B/X42/X52/X60/X65MH), overcoming six key technical bottlenecks including hydrogen embrittlement damage and low-temperature toughness, forming a relatively complete matrix of hydrogen transmission pipeline steel products. CNPC Boshisun (Qinhuangdao) Steel Pipe Co., Ltd. : Successfully trial-produced various specifications of pure hydrogen transport "straight seam submerged arc welded pipe" (D610x12.7/14.3mm, material/X60MH). SPIC Central Research Institute: The hydrogen storage and transportation team of the Advanced Low-Carbon Institute has developed large-diameter (DN150), high-pressure (10MPa) non-metallic flexible hydrogen transmission pipelines, which have successfully achieved safe and stable operation for 30 days on the test platform. CNOOC Engineering Special Equipment Division : The design results of the "cryogenic liquid hydrogen storage tank" for the deep-sea floating platform, independently developed by the division, have received the Approval in Principle (AIP) certificate from the China Classification Society (CCS), indicating that the safety and reliability of the results fully comply with the classification society's regulatory requirements. Dalian Institute of Chemical Physics, Chinese Academy of Sciences: Breakthrough in Alkaline Electrolyzer Membrane Technology: Developed ultra-thin (20μm) composite separators, increasing the efficiency of the electrolysis system to 85% (LHV) and extending its lifespan beyond 60,000 hours. (II) Fuel Cell Innovation Liaoning General Aviation Academy: The team led by Academician Yang Fengtian at the Liaoning General Aviation Academy of Shenyang Aerospace University successfully completed the maiden flight of China's first four-seat hybrid electric aircraft, the RX4M, at the Faku Caihu Airport in Shenyang, contributing a "Chinese solution" to the global development of electric aircraft. Oriental Hydrogen: Achieved a patent for a system that increases the humidity of air entering the stack in the field of fuel cell technology. Georgia Power: The second experiment with a hydrogen-natural gas blend on the M501GAC type natural gas turbine, in collaboration with Mitsubishi Power, has been successfully completed under both partial and full load conditions. US Hydrogen Association (DoE) Leads Formation of "Hydrogen Refueling Station Compatibility Alliance": To unify the 70MPa hydrogen refueling nozzle interface standards, eliminating barriers in hydrogen refueling protocols among automakers such as Toyota, Hyundai, and Nikola, and promoting the interoperability of the hydrogen refueling network.