Chinese Rare-Earth Stocks Surge After Beijing Tightens Controls

JL Mag Rare-Earth is looking to raise $117.5 million via a debt offering, according to a Hong Kong bourse filing Thursday.

The magnet seller said it would raise the sum via the sale of 1.75% convertible bonds that expire Aug. 4, 2030, and can be exchanged for H shares in the company at an initial price of HK$21.38 each.

Assuming the debt is fully converted, the company would have to issue 43,141,406 H shares, representing nearly 19% of its existing issued H share capital and 3.14% of its entire issued share capital.

Funds raised will be used to extinguish existing borrowings, repurchase H shares, and for general working capital, the company said.

UBS AG Hong Kong Branch and DBS Bank are overseeing the debt offering on JL Mag Rare-Earth's behalf.

JL Mag Rare-Earth is looking to raise $117.5 million via a debt offering, according to a Hong Kong bourse filing Thursday.

The magnet seller said it would raise the sum via the sale of 1.75% convertible bonds that expire Aug. 4, 2030, and can be exchanged for H shares in the company at an initial price of HK$21.38 each.

Assuming the debt is fully converted, the company would have to issue 43,141,406 H shares, representing nearly 19% of its existing issued H share capital and 3.14% of its entire issued share capital.

Funds raised will be used to extinguish existing borrowings, repurchase H shares, and for general working capital, the company said.

UBS AG Hong Kong Branch and DBS Bank are overseeing the debt offering on JL Mag Rare-Earth's behalf.

JL Mag Rare-Earth said it expects its H1 profit to rise by up to 180% year over year, according to a Hong Kong bourse filing Tuesday.

Shenzhen shares of the magnet seller were up 3% in morning trade Wednesday.

The company expects attributable profit of 300 million yuan to 335 million yuan for the six months ended June 30, up 151% to 180% from the 119.7 million yuan posted in the same period last year.

JL Mag Rare-Earth expects attributable profit to surge 151% to 180% to between 300 million yuan and 350 million yuan in the first half from 119.7 million yuan in the year-ago period, according to a Tuesday filing with the Shenzhen bourse.

The rare-earths company attributed the forecast to its focus on new energy and energy-saving protection field, among others, the filing said.

Operating income is also expected to rise 4% to 5% to about 3.5 billion yuan, the filing said.

Chinese exports of rare earth permanent magnets fell 52.9% to 1,238 metric tons in May from April, Reuters reported, citing data from Customs released Friday.

On a yearly basis, shipments plunged 74%, the report said.

The drop in exports comes as customs officials have been more circumspect about approving rare earth exports, the report said, citing industry sources.

In early April, China imposed export restrictions on seven medium-to-heavy rare earth products and some magnets which are key components in the auto, aerospace, semiconductor, and military equipment segments worldwide, the report said.

Producers such as JL MAG Rare-Earth and Innuovo Technology have recently obtained export licenses for some clients, the report said.

JL Mag Rare-Earth obtained a license for rare earth exports, including for magnets, motor rotors, and components to the US, Europe, and Southeast Asia, Reuters reported.

The metals company applied for licenses following its inclusion in China'e export control list in April, with the applications approved in succession, the report said, citing a post on the Shenzhen stock exchange.

JL Mag Rare-Earth did not say when the licenses were approved, but the approval was announced following a deal ith US and Chinese officials in London, the report said.

Innuovo Technology also said Friday it obtained export licenses, the report said. The rare earths company did not mention where its customers were from, according to Reuters.