Xiamen Tungsten Co., Ltd. (600549.SS): The Critical Mineral Titan of China
I. Introduction & Episode Roadmap (00:00 โ 00:10)
On February 4, 2025, China's Ministry of Commerce and the General Administration of Customs published a joint notice adding twenty-five rare metals and related technologies to the country's export control list. Buried in the annex, alongside tellurium and bismuth, were two unglamorous industrial chemicals: ammonium paratungstate and tungsten oxide.1
To almost everyone outside the metals trade, this meant little. Ammonium paratungstate โ ไปฒ้จ้
ธ้ต Ammonium Paratungstate, universally shortened to APT โ is a white crystalline powder resembling coarse table salt. It serves as the essential intermediate step between tungsten ore and every practical tungsten application: carbide tips on drill bits for cutting engine blocks, filaments inside vacuum coating chambers, penetrator cores in armor-piercing ammunition, and ultra-fine wire for slicing solar wafers.
What followed was one of the sharpest price movements in industrial metals this decade. Chinese tungsten concentrate started 2025 around RMB 143,000โ144,500 per tonne and ended the year at RMB 455,000โ460,000 โ a surge of roughly 216%.
Export-market APT rose from $335โ345 per metric tonne unit to $1,050โ1,115 over the same twelve months.2 By mid-2026, the export price detached from the domestic Chinese market entirely: FOB China APT traded at $2,600โ3,250/mtu in late June 2026, while domestic Chinese APT sat around $1,200โ1,300/mtu.3 The same white powder commanded two to two and a half times its domestic value upon crossing a Chinese port.
At the center of that market dislocation sits ๅฆ้จ้จไธ Xiamen Tungsten Co., Ltd. โ a Fujian provincial state-owned enterprise unfamiliar to most international investors and often categorized by domestic retail investors as a rare-earth producer. Neither perception captures the business accurately.
Here is the underlying paradox of the company's financials: in FY2025, Xiamen Tungsten reported consolidated revenue of RMB 46.265 billion โ roughly $6.4 billion โ up 30.79%, with net profit attributable to shareholders reaching RMB 2.309 billion, up 34.89%.4 Almost exactly half of that top-line revenue originated from lithium-ion battery cathode materials.
Yet on a core business level, tungsten and molybdenum products generated approximately RMB 5.6 billion in gross profit at a 28.38% margin, while battery materials โ on virtually identical revenue โ generated roughly RMB 1.9 billion at a 9.78% margin.5 One division operates as a high-margin metallurgy franchise; the other functions as a high-volume converter processing cobalt and lithium into cathode powder for a fee.
Evaluating Xiamen Tungsten purely on headline revenue suggests a battery materials producer experiencing strong growth. Examining gross profit generation reveals that tungsten accounts for roughly two-thirds of earnings. That distinction between revenue appearance and profit reality is the central economic dynamic of the business.
The roadmap for this analysis covers: how a distressed alumina plant in Xiamen pivoted to tungsten in 1982 and spent four decades expanding downstream into precision tooling; how the company incubated a battery cathode division and listed it separately on the ็งๅๆฟ STAR Market in 2021, retaining operational control while shifting capital intensity onto minority shareholders; why the tungsten segment's economics differ structurally from the cathode segment; how ultra-fine tungsten wire for solar wafer cutting grew into a high-return niche before its volume growth stalled in 2025; how Beijing restructured the national rare-earth sector around the company rather than consolidating it away; and what a skeptical investor must evaluate before assuming a state-controlled conglomerate with three distinct operating units and an unresolved related-party mine acquisition represents a durable compounder.
A final structural consideration governs how these financial figures must be interpreted: Xiamen Tungsten does not fully own its primary operating assets. GESAC, the carbide and tooling division, has a 30% minority interest. The tungsten wire subsidiary carries 39.43% minority ownership. The cathode business carries 49.72%, and the rare earth division carries 34.80%.5 Consolidated revenue and gross profit reflect an industrial system that Xiamen Tungsten operates, rather than the net economic interest owned directly by parent shareholders. Every headline metric should be evaluated with that structural discount in mind.
The narrative begins where the tungsten did.
Subscribe on LinkedInII. Strategic Origins & The Upstream Mine Lock (1982โ2005) (00:10 โ 00:25)
The facility that laid the foundation for Xiamen Tungsten was not originally designed for tungsten processing. Established in 1958 as ็ฆๅปบ็ๅฆ้จๆฐงๅ้ๅ Fujian Xiamen Alumina Plant, the enterprise was an outcome of industrial planning that placed heavy manufacturing in Xiamen despite a local scarcity of both bauxite ore and low-cost electrical power. The plant struggled for over two decades.
In 1982, during the early stages of China's ๆน้ฉๅผๆพ reform and opening, the factory abandoned alumina refining to focus on tungsten processing. Two years later, it was renamed ็ฆๅปบ็ๅฆ้จ้จๅๅ Fujian Xiamen Tungsten Factory.6
The pivot was grounded in geology. Fujian sits on the eastern edge of China's South China tungsten belt, adjacent to Jiangxi province, which has served as a global center for tungsten extraction since prospectors identified the Dayu deposits before the First World War. China holds the majority of global economically recoverable tungsten reserves and supplies more than three-quarters of annual mine output โ a concentration documented for decades by the U.S. Geological Survey in its mineral commodity summaries.7
Tungsten's physical properties explain its strategic utility. With a melting point of 3,422ยฐC โ the highest of any metal โ along with high density and exceptional hardness, tungsten is essential for high-stress industrial applications. It is critical for cutting tools operating at high speed through hardened steel, filaments in vacuum coating chambers, precision ballast, and kinetic penetrator cores. Because effective low-cost substitutes do not exist, the metal remains prominent on strategic minerals lists across North America, Europe, and Asia.
Beyond geology, Beijing's regulatory policy established the economic framework of the tungsten industry. The central government designated tungsten as a ไฟๆคๆงๅผ้็นๅฎ็ฟ็ง protected mineral subject to specific extraction controls, placing mine production under annual quotas distributed by provincial authorities to licensed operators.
In 2025, the Ministry of Natural Resources set the first-batch national tungsten mining quota at 58,000 tonnes of 65% WO3 concentrate โ 4,000 tonnes below the corresponding 2024 first-batch allocation โ and did not publish a second-half quota at all.1 Actual Chinese tungsten concentrate output in 2025 reached 133,600 tonnes, down 1.92% year over year, according to the China Nonferrous Metals Industry Association.1
This quota system converts a commodity market into a supply-rationed structure. Operators holding extraction quotas possess protected production rights that cannot be eroded by new domestic entrants, while foreign producers face higher cost structures set by lower-grade deposits. However, because this advantage stems from an administrative license rather than proprietary customer switching costs, it functions as a policy asset subject to regulatory risk rather than a self-earned competitive moat.
Domestic demand for the metal has remained steady. China consumed 75,652 metal tonnes of tungsten in 2025, a 5.0% increase year over year, with primary consumption accounting for 63,652 tonnes. Cemented carbide alone absorbed 45,667 tonnes, up 7.0%, while scrap recycling supplied 12,000 tonnes.1 The market is characterized by modest demand growth, restricted mine allocations, and secondary recycling meeting roughly one-sixth of total volume.
Corporate restructuring followed the establishment of processing scale. In December 1997, the factory was reorganized into a joint-stock enterprise, Xiamen Tungsten Co., Ltd. In November 2002, the shares listed on the ไธๆตท่ฏๅธไบคๆๆ Shanghai Stock Exchange under code 600549.6 State ownership remained centralized under the Fujian provincial metals apparatus, primarily through ็ฆๅปบ็็จๆ็จๅ๏ผ้ๅข๏ผๆ้ๅ
ฌๅธ Fujian Rare Earth (Group), which held 28.38% of the shares directly by the end of 2025, acting in concert with Fujian Metallurgy's residual 2.31%.5
The public listing provided access to capital that funded expansion beyond basic toll refining. Proceeds were directed into large-scale chemical smelting and metallurgical processing. Through the late 1990s and 2000s, Xiamen Tungsten built ammonium paratungstate (APT) and tungsten powder capacity. This downstream processing segment relies on precise chemical yield, impurity control, and energy management, creating operational barriers to entry without overleveraging the balance sheet.
Concurrently, the company acquired targeted upstream mining assets. Today, Xiamen Tungsten operates three producing tungsten mines โ ๆด้ณ่ฑซ้นญ Luoyang Yulu in Henan, ๅฎๅ่กๆดๅ Ninghua Xinglukeng in Fujian, and ้ฝๆ้้ผ Duchang Jinding in Jiangxi โ plus one site under construction at ๅ็ฝๅทจๅ
ธ Bobai Judian in Guangxi.5 Combined, the active mines produce approximately 12,000 tonnes of 65% WO3 concentrate annually.
Despite this captive supply, internal mine production falls short of total raw material requirements. Xiamen Tungsten stated in its FY2025 annual report that its own mines "can only satisfy part of company demand" for tungsten concentrate.8 Consequently, the enterprise operates as a net purchaser of tungsten concentrate. When market prices for concentrate fluctuate, higher mining revenues are counterbalanced by increased feedstock costs across its downstream smelting, powder, and tool manufacturing divisions.
This net-buyer dynamic became clear in 2025. When concentrate ran up roughly 216% from January to December, the mining subsidiaries booked windfall profit on the tonnes they dug.2 However, downstream units purchased the majority of their feedstock at prevailing open-market prices. Margin preservation depended on the company's ability to pass higher raw material costs to customers rather than on mine ownership alone. Captive mining provided a partial cost hedge, but downstream pricing power served as the primary mechanism for profit stability.
Recognizing the structural limits of raw material processing, management shifted focus from upstream mining expansion toward downstream high-precision manufacturing from the mid-2000s onward.
III. The Strategic Pivot: Moving Downstream into Carbide Tools (2006โ2015) (00:25 โ 00:45)
A familiar commercial tension confronts every intermediate-goods manufacturer: shipping containers of high-purity metal powder abroad, only to see those same atoms returned months later embedded in precision milling cutters at a massive price markup. The primary processing yields modest margins, while secondary fabricators capture the bulk of the economic value.
For Chinese tungsten producers in the 1990s and 2000s, this was a persistent structural reality. Ammonium paratungstate (APT) and basic tungsten powder were price-taking commodities. Buyers calculated raw concentrate costs and conversion expenses down to narrow percentages, keeping processor margins constrained to tolling fees.
The path toward higher value lay in cemented carbide โ ็กฌ่ดจๅ้ โ an area where the company had early roots. In 1989, the Xiamen tungsten operation established ๅฆ้จ้้นญ็น็งๅ้ๆ้ๅ
ฌๅธ Xiamen Golden Egret Special Alloy Co., Ltd., known as GESAC, as a Sino-foreign joint venture with a Japanese hard-metals partner.9 That partner's corporate successor, ๆฅๆฌ่ๅๆๆ A.L.M.T. Corp., held a 3.19% stake on Xiamen Tungsten's share register at the end of 2025 โ a long-standing technical partnership maintained through equity.5
The mechanics of cemented carbide underpin the segment's economics. Tungsten carbide โ tungsten chemically bonded with carbon โ ranks among the hardest manufactured compounds. Finely milled to single-digit micron dimensions, the powder is blended with cobalt, pressed into specialized geometries, and sintered at approximately 1,400ยฐC. As the cobalt melts, it binds the carbide grains into a composite that approaches diamond in hardness while offering superior fracture toughness, providing the durable cutting edges required for industrial machining.
Conceptually, cemented carbide functions like reinforced concrete at a microscopic scale under extreme heat: the carbide grains serve as the aggregate, while cobalt acts as the binder. Achieving consistent tool performance depends on precise control over grain size distribution, binder ratios, furnace atmospheres, cooling rates, multi-layer coatings, and complex edge geometries. A minor deviation in thermal or chemical processing can cause tool failure during high-speed machining, risking damage to costly workpiece components. Consequently, the global high-end tooling market historically consolidated around established players such as Sandvik, Kennametal, and Iscar, leaving domestic Chinese manufacturers focused primarily on entry-level products for two decades.
GESAC's progression โ advancing from raw powder to carbide blanks and rods, indexable inserts, solid carbide end mills, PCB micro-drills, and comprehensive tooling systems โ marked the primary economic shift for Xiamen Tungsten between 2006 and 2015. This expansion relied heavily on ๅฝไบงๆฟไปฃ domestic substitution: Chinese industrial buyers, under pressure to reduce costs and secure component supply, increasingly qualified domestic suppliers whose tool life approached imported standards.
The technical requirements of downstream manufacturing are demonstrated by the printed circuit board (PCB) micro-drill. Modern electronics require thousands of microscopic holes drilled through fiberglass and copper laminates. These solid carbide drills, often thinner than a human hair and spinning at speeds exceeding 100,000 rpm, must complete tens of thousands of holes without breaking or deviating.
In these applications, the raw material cost of the tungsten represents a fraction of the finished tool's value, which is driven by machining precision and operational reliability. Highlighting this shift, Xiamen Tungsten's FY2025 annual report noted targeted growth in high-end powder sales to semiconductor and micro-drill markets, helping offset broader volume declines in commodity powder exports subject to regulatory controls.5
The financial impact of this transition is reflected in revenue realization. Commodity tungsten powder is traded by weight against benchmark metal quotes. Conversely, precision solid carbide end mills and PCB micro-drills are priced based on the operational hours and efficiency gains they deliver to manufacturers. Converting raw tungsten into finished precision tooling increases realized revenue per unit of metal by roughly an order of magnitude while reducing direct exposure to spot commodity price fluctuations.
However, market performance shows that domestic tool leadership remains competitive rather than fully consolidated. By comparison, ไธญ้จ้ซๆฐ China Tungsten & High-Tech, the listed tungsten division of state-owned ไธญๅฝไบ็ฟ China Minmetals, reported FY2025 revenue of RMB 17.639 billion (up 19.34% year over year) and net profit attributable to shareholders of RMB 1.281 billion (up 29.2%).
China Tungsten & High-Tech's cutting tools and equipment segment generated a 35.05% gross margin, compared to 26.76% for its ores and powders and 18.93% for other cemented carbide items.10 By contrast, Xiamen Tungsten's entire tungsten and molybdenum division recorded a gross margin of 28.38% in FY2025.5 On a consolidated basis, China Tungsten & High-Tech converted approximately 7.3% of revenue into net profit in 2025, compared to roughly 5.0% for Xiamen Tungsten โ a gap largely driven by Xiamen's high-volume, lower-margin battery materials business.
Regarding capital allocation, Xiamen Tungsten pursued a distinct strategy during the 2010s. While international mining investors funded high-cost extraction projects in Western jurisdictions, Xiamen Tungsten directed capital primarily toward domestic refining efficiency and downstream fabrication technology.
This approach proved effective as several overseas mining ventures encountered financial strain, whereas domestic processing assets expanded. However, prioritizing downstream processing left Xiamen Tungsten with limited internal mine supply relative to its total smelting capacity โ a structural shortfall the enterprise has sought to address through equity investments and asset acquisitions.
Financial metrics indicate that capital efficiency experienced moderate compression over recent reporting periods. The company's weighted average return on equity (ROE) recorded 13.99% in FY2025, compared to 14.31% in 2024 and 15.19% in 2023, reflecting lower capital returns amid ongoing capacity expansion.4
Subsequent Internationalization. By 2025, the tooling division maintained a catalog of over 120,000 product specifications and 300 specialized tooling packages across the automotive, aerospace, energy, and general machining sectors.5 This shift transitioned the business from selling standalone cutting tools toward delivering complete tooling systems and process engineering services to major domestic industrial clients, including ๆ้ฃ้ๅข Chengdu Aircraft, ไธ้ฃๅ
ฌๅธ Shanghai Aircraft Manufacturing, ่ฑช่ฟ็งๆ Himile, ็ฒพ้ Jingdiao, ๅๅฉๆฑฝ่ฝฆ Geely, and BYD.5
To support international distribution, the company established its first overseas cutting-tool manufacturing facility in Thailand, alongside sales subsidiaries and logistics centers in Germany, Hungary, Thailand, and Brazil. Additionally, Xiamen Tungsten agreed to acquire 100% of German tooling firm Mimatic through its GESAC German subsidiary, backed by a planned EUR 4.9011 million capital injection. As of the FY2025 annual report, the Mimatic acquisition remained subject to regulatory approvals and had not been consolidated into financial statements.5
These international initiatives yield mixed implications. Overseas expansion provides localized production capability to navigate trade frictions and tariff barriers. However, overseas markets represent a modest portion of total scale: international revenue reached RMB 6.260 billion in FY2025 (approximately 14% of group revenue), with gross margins declining by 1.02 percentage points year over year to 20.57%.5
In specialized technology segments, Xiamen Tungsten became the first domestic manufacturer capable of producing divertor tungsten probe assemblies for the International Thermonuclear Experimental Reactor (ITER), delivering precision-machined, high-purity tungsten components to experimental fusion facilities including China's EAST reactor and the international ITER project.1
While the tooling business established its technical foundation, another operational division within the group was developing a distinct product line in battery chemistry.
IV. The Battery Material Pivot & The STAR Market Spin-Off (2016โ2021) (00:45 โ 01:05)
The bridge from tungsten to batteries is grounded in shared chemical processes, specifically involving cobalt.
Tungsten carbide requires cobalt as its primary binder metal. As a result, any major carbide producer operates industrial-scale cobalt metallurgy, including dissolution, purification, precipitation, and particle morphology control. Lithium cobalt oxide โ ้ด้
ธ้ LCO, the cathode material standard across consumer electronics โ relies on these exact processing capabilities. Xiamen Tungsten entered battery materials in 2003, well before the sector attracted widespread investor attention, leveraging that core operational overlap.6
For over two decades, the company established a strong position in that niche. By 2025, Xiamen Tungsten's LCO business controlled nearly 50% of the global market, maintaining its long-standing top worldwide ranking while the top five Chinese producers collectively held an 87.2% market share.1 The structural characteristics of this product line distinguish it sharply from the broader cathode industry.
Unlike electric vehicle chemistries, LCO is a mature formulation built for consumer electronics. Supply contracts are concentrated among a small group of established battery and device manufacturers: Amperex Technology Limited, ไธๆSDI Samsung SDI, ๆ็ฐ่ฃฝไฝๆ Murata, LG Energy Solution, ๆฌฃๆบ่พพ Sunwoda, ็ ๆตทๅ ๅฎ Cosmx, and ๆฏไบ่ฟช BYD.5 Qualifying a new cathode supplier for consumer devices requires a multi-year testing protocol involving both cell manufacturers and consumer electronics original equipment manufacturers (OEMs). Customer volumes are substantial but stable, encouraging rational capacity expansion and reinforcing an incumbent-dominated market structure.
Product differentiation in LCO centers on operating voltage. Operating a cobalt oxide cathode above 4.35 volts extracts more lithium per gram to boost energy density, but it also destabilizes the crystal structure and accelerates cell degradation. High-voltage LCO requires specialized chemical doping and surface coating to ensure structural stability through repeated cycling at 4.5 volts and higher. By 2025, cathode materials rated above 4.5V accounted for 58% of the company's LCO shipments.11 As expanding artificial intelligence features increased power consumption in mobile devices, this shift toward higher-voltage products supported favorable segment pricing.
By contrast, the company's electric vehicle cathode operations face very different market dynamics.
During the late 2010s, domestic cathode producers expanded aggressively into ternary NCM/NCA and lithium iron phosphate (LFP) formulations for electric vehicles. Competitors included ๅฎน็พ็งๆ Ronbay Technology, ๅฝๅ็งๆ Easpring, ๆๆ่กไปฝ Shanshan, ๆนๅ่ฃ่ฝ Hunan Yuneng, and ๅพทๆน็บณ็ฑณ Dynanonic, alongside international producers such as Umicore and ์์ฝํ๋ก Ecopro. Rapid industry capacity expansion outpaced market demand, enabling battery cell manufacturers facing automotive price pressures to push margin compression upstream. Cathode processors were left operating on tolling-style economics: purchasing lithium and nickel at spot prices, converting the metals, selling at narrow processing spreads, and absorbing inventory risks.
These market pressures impacted financial performance. In 2025, Xiamen Tungsten shipped 55,465 tonnes of ternary cathode material, representing a modest 7.89% year-over-year volume increase, with management acknowledging that ternary formulations continued losing ground to LFP amid intense industry ๅ
ๅท involution.5 Meanwhile, LFP shipments grew from a minimal base by 2,171% to reach 21,963 tonnes, utilizing a proprietary hydrothermal manufacturing process.5 Consolidated gross margin for the battery materials segment stood at 9.78%, marking a slight decline from 9.87% in the prior year.5
The divergence between the two product lines reflects broader market mechanics. Within the same organization, operating under shared procurement and process technologies, one division generates stable margins by serving a concentrated consumer market with high qualification barriers, while the other struggles to reach a 10% gross margin despite a 45% total shipment increase.
This margin gap stems primarily from structural market differences rather than operational execution: a concentrated, qualification-heavy consumer sector versus a capital-intensive, buyer-dominated automotive market. Consequently, analyzing performance across either segment requires evaluating underlying market structures rather than focusing solely on management strategy.
This operational divergence laid the groundwork for a key corporate restructuring.
On August 5, 2021, the parent company completed an initial public offering for its battery materials subsidiary, ๅฆ้จๅฆ้จๆฐ่ฝๆบๆๆ่กไปฝๆ้ๅ
ฌๅธ XTC New Energy Materials, on the STAR Market under ticker 688778. The offering issued 62,893,067 new shares at RMB 24.50 per share, raising approximately RMB 1.54 billion. The transaction reduced Xiamen Tungsten's equity stake from 61.29% pre-offering to 45.97% of the expanded 251.6 million shares, with the stock closing its first trading session at RMB 121.66, representing a 396.57% gain.12
This transaction allowed the parent company to maintain operational control while reducing its direct economic ownership. Following subsequent share transactions, minority interests in XTC stood at 49.72% by the end of 2025, leaving the parent holding just over 50%.5 Under this structure, the subsidiary accesses public equity capital at growth-oriented market valuations to fund capital expenditures and working capital requirements, while the parent continues to consolidate top-line revenues while transferring roughly half of the net profit and operational risk to minority shareholders.
From an operational standpoint, this structure enabled off-balance-sheet equity financing during a period of rapid industry expansion. From a financial perspective, Xiamen Tungsten consolidates RMB 19.9 billion of lower-margin battery materials revenue, which expands reported top-line turnover but dilutes group-level gross margins while delivering only half of net earnings to parent shareholders.5 As a result, evaluating the parent enterprise on revenue multiples can obscure underlying profitability, whereas evaluating earnings on a look-through basis provides a clearer picture of economic returns.
The subsidiary's first-day trading gain reflected broader equity market conditions for battery supply chain companies in mid-2021, when public markets priced future volume growth at premium valuations. Executing the spin-off during that market window allowed the enterprise to secure low-cost capital to fund subsequent capacity expansion ahead of broader industry margin compression.
Operating results for XTC in 2025 reflected changing market conditions: total revenue reached RMB 19.880 billion, with net profit rising 40.61% to RMB 748.8 million on total cathode shipments of 142,700 tonnes.5 Overseas sales grew 127.49% to RMB 1.913 billion, achieving a 16.84% gross margin that meaningfully exceeded domestic levels and reflected stronger pricing power in international markets.11 Operational expansion also included a joint venture with French group Orano to build 40,000 tonnes of ternary cathode capacity, alongside the commercial ramp-up of an LFP production facility in Ya'an, Sichuan.5
Beyond current cathode lines, the subsidiary continues developing next-generation battery chemistries. Disclosed research initiatives include lithium-replenishment additives, sodium-ion cathode materials, solid-state battery components, solid electrolytes, advanced precursor architectures, and a proprietary "NL" cathode structure.1 In May 2026, management stated that solid-state cathode materials had completed customer validation and entered pilot batch delivery, while asserting purity and cost advantages in lithium sulfide production for solid electrolytes.13 While these development milestones highlight technical initiatives, commercial viability will depend on large-scale manufacturing adoption and customer integration.
Financial metrics indicate ongoing margin pressure across the segment, with fourth-quarter 2025 gross margin recording 9.90%.11 Despite a 45% increase in total volume and expanding consumer electronics demand, the cathode division's overall gross margin remained below 10%, illustrating where pricing power and economic returns reside across Xiamen Tungsten's broader business portfolio.
V. Segment Breakdown & Unit Economics: Where Profits Actually Live (01:05 โ 01:25)
Evaluating Xiamen Tungsten solely by segment revenue creates a misleading picture of where the company actually generates its earnings. In FY2025, main-business revenue figures showed tungsten, molybdenum, and other non-ferrous products generating RMB 19.632 billion at a 28.38% gross margin โ up 1.87 percentage points year over year. Rare earth products generated RMB 6.002 billion at a 10.08% gross margin, down 0.73 percentage points. Battery materials generated RMB 19.813 billion at a 9.78% gross margin. Legacy real estate operations contributed RMB 43 million at a negative margin.5
Converting those figures into absolute gross profit reveals a sharp inversion. Tungsten and molybdenum generated approximately RMB 5.6 billion in gross profit โ nearly 69% of the company's total โ on roughly 43% of main-business revenue. Battery materials produced approximately RMB 1.9 billion in gross profit, or about 24% of the total, on a nearly identical 44% revenue share. Rare earths contributed roughly RMB 0.6 billion, representing about 7% of gross profit on 13% of revenue.
On an internal divisional reporting basis, which includes intra-group sales and measures pre-tax profit, earnings concentration was even more pronounced. Tungsten and molybdenum generated RMB 3.205 billion in total profit, up 27.36% year over year, compared to RMB 858 million for energy new materials and RMB 146 million for rare earths.4 Roughly three-quarters of pre-tax earnings originated from a single division.
Tungsten and molybdenum. The tungsten division functions as the primary profit engine, deriving strength from upstream mining, midstream chemical conversion, and downstream tooling fabrication. Upstream mines benefit from elevated concentrate prices, while midstream smelting operations capture conversion spreads at scale, establishing the company as a leading domestic supplier of APT and tungsten powder with product quality and scale operating at global standards.1 Cemented carbide sales volume expanded 13% in 2025, while cutting tool volume grew 16.24% with segment revenue rising 21%. These growth rates outpaced raw metal price pass-through alone, reflecting market share gains alongside cost-driven price adjustments.5 The molybdenum operation holds market leadership, with comprehensive ammonium molybdate commanding over 40% domestic market share to rank first nationally, alongside top domestic market share in molybdenum powder and the successful domestic substitution of four-Nines purity molybdenum powder.1
Pricing power serves as the essential mechanism supporting segment margins. In a May 2026 institutional briefing, management described tungsten as a rigid-demand input for cutting tools capable of absorbing cost increases, noting that the company executed multiple rounds of differentiated price adjustments during 2025.13 Financial results supported the claim: the segment's gross margin expanded by 1.87 percentage points in a year when domestic concentrate prices averaged RMB 217,400 per tonne, up 59.30%, and APT prices averaged RMB 318,900 per tonne, up 57.85%.1 Expanding gross margin while primary feedstock costs inflate by nearly 60% demonstrates significant pricing power across downstream product lines.
The domestic tungsten peer group remains highly concentrated, led by China Tungsten & High-Tech and ็ซ ๆบ้จไธ Chongyi Zhangyuan Tungsten. Internationally, global tooling manufacturers Sandvik, Kennametal, and Iscar represent primary benchmark competitors, though export controls have restricted direct international competition within the domestic Chinese market. The domestic market structure remained stable in 2025, with major producers maintaining steady market shares within a quota-constrained regulatory framework.1
A notable divergence appeared in the 2025 tungsten production and sales volumes. APT production reached 22,456 tonnes, while external sales fell 36.87% to 3,314 tonnes; tungsten powder production reached 11,975 tonnes against external sales of 9,670 tonnes, down 13.98%.5 The enterprise consumed the majority of its intermediate chemical output internally rather than selling it to merchant markets.
This shift reflects both export control restrictions on merchant volumes and a deliberate strategy to migrate downstream. Converting chemical intermediates into cemented carbide and finished cutting tools captures significantly higher value per unit of metal than selling raw powder. Consequently, declining external intermediate sales alongside expanding tool volumes indicates successful value-chain migration rather than weakening product demand.
Battery cathode materials. The economic structure of the battery materials division stands in sharp contrast to the tungsten franchise. Product prices are indexed directly to lithium, cobalt, and nickel spot markets, requiring substantial working capital commitments prior to revenue realization, while sales remain concentrated among large battery manufacturers with strong bargaining leverage. The division's primary strategic asset is its lithium cobalt oxide (LCO) market position.
A key raw-material asymmetry affected 2025 operational results: domestic cobalt prices averaged RMB 263,500 per tonne, up 43.61%, while lithium carbonate averaged RMB 75,400 per tonne, down 16.42%.1 Higher cobalt prices expanded LCO top-line revenue and generated inventory gains, but simultaneously increased binder feedstock costs for the cemented carbide division, illustrating the interdependencies across operating segments.
Molybdenum operations. Molybdenum operations are consolidated within the tungsten segment but possess distinct economic characteristics. Essential for improving temperature resistance and corrosion performance in steel alloys, molybdenum sees over 60% of its consumption directed into alloy and stainless steel manufacturing, earning a role in aerospace and defense applications.1
The 2025 pricing environment for molybdenum remained moderate: domestic 45โ50% molybdenum concentrate averaged RMB 3,837.52 per tonne-unit, up 6.62%, while molybdenum powder averaged RMB 443,300 per tonne, up 2.90%.1 Chinese molybdenum concentrate output grew 0.6% to 317,900 tonnes on a 45% standard basis, continuing a multi-year deceleration in national supply growth.1
Within this market environment, ๆ้ฝ่นๆณข Chengdu Hongbo โ Xiamen Tungsten's molybdenum subsidiary โ increased revenue by 25.48% to RMB 5.851 billion, while net profit grew 41.42% to RMB 152.8 million.5 Although net profit margins remained thin, the subsidiary maintained leading domestic market positions in molybdenum powder and ammonium molybdate while advancing technical capability in semiconductor-grade molybdenum sheet and high-precision polishing applications.1
Regulatory controls also impacted segment operations. In March 2025, Henan province issued draft environmental standards lowering allowable particulate emissions for the molybdenum industry from 50 mg/mยณ to 10 mg/mยณ, increasing ferromolybdenum production costs and compressing processing margins.1 Stricter environmental enforcement generally favors large compliant producers by encouraging industry consolidation, though it requires ongoing capital expenditures for compliance.
Rare earth operations. Rare earths represent the smallest operating segment, where the company maintains a strategic minority position in primary processing. Magnetic material shipments expanded 27.16% to 11,275 tonnes in 2025, driving a 41% revenue increase through expanded sales to electric vehicle, high-efficiency appliance, and industrial motor manufacturers, alongside initial product qualifications in humanoid robotics applications.5 The primary operating unit, ็ฆๅปบ็้้พ็จๅ Fujian Jinlong Rare Earth, generated RMB 5.856 billion in revenue and RMB 237.6 million in net profit, with Xiamen Tungsten holding a 65.2% equity interest.5 Compared to industry leaders ้ๅๆฐธ็ฃ JL MAG Rare-Earth and ๅๆน็จๅ Northern Rare Earth, Xiamen Tungsten operates as a secondary magnet producer.
Two cross-cutting factors clarify consolidated financial results. First, quarterly net profit followed an uneven trajectory through 2025, recording RMB 391 million in Q1, RMB 581 million in Q2, RMB 810 million in Q3, and RMB 528 million in Q4 โ declining in the fourth quarter despite revenue reaching a peak of RMB 14.264 billion.1 This pattern highlights inventory accounting effects: rapid raw material price movements can create temporary timing mismatches between inventory costs and realized selling prices, causing quarterly profit to diverge from revenue trends.
Second, customer and supplier concentration remained balanced. In 2025, the top five customers accounted for 34.72% of total sales, while the top five suppliers represented 33.27% of raw material purchases, with no single counterparty exceeding 50% and no related-party transactions recorded among top groups.5 This structure indicates manageable counterparty risk across major operating units.
Finally, ownership structure remains a key consideration when evaluating segment earnings. Xiamen Tungsten does not hold total ownership across its core operating subsidiaries: minority shareholders hold 30% of GESAC, 39.43% of tungsten wire producer ๅฆ้จ่น้นญ Xiamen Honglu, 49.72% of XTC New Energy, and 34.80% of Jinlong Rare Earth.5 Because consolidated statements reflect total subsidiary revenue and gross profit, parent-level financial metrics must be evaluated on a look-through basis to measure net equity returns accurately.
This structural dynamic explains why a single niche product line within one subsidiary carries disproportionate strategic importance for parent shareholders.
VI. Micro-Innovation & High-Margin Optionality: Photovoltaic Tungsten Wire (01:25 โ 01:35)
Consider a rectangular ingot of monocrystalline silicon, roughly the size and weight of a standard brick, worth several hundred renminbi. To produce solar cells, that single block must be sliced into approximately 150 ultra-thin wafers without cracking or destroying the brittle material.
The tool performing this task is a high-speed wire saw. A single continuous strand of wire, kilometers long, is threaded back and forth across hundreds of precision guide grooves to create a web, then pulled through the silicon block at high velocity while carrying abrasive diamond particles bonded to its surface. Every pass removes not only the wafer itself but also a thin slice of silicon converted into dust โ a loss known in the trade as kerf loss (ๅๅฒๆ่). In an industry where polysilicon represents the single largest manufacturing input cost, kerf loss represents direct yield destruction.
For two decades, high-carbon steel served as the standard material for cutting wire. Solar equipment makers relentlessly drove wire diameters downward, knowing that thinner wire reduces kerf width and yields more wafers per ingot. However, steel reached a physical limit: as diameter shrinks below roughly 35 micrometers, tensile strength degrades faster than required cutting force drops. Under operational tension, steel wire snaps, destroying the silicon block mid-cut and halting the production line.
Drawn tungsten wire overcomes this structural limitation. Possessing exceptional tensile strength โ the property that enabled its historical use as incandescent light bulb filaments โ tungsten survives being drawn to extremely fine gauges. Substituting tungsten for steel lowers the industry's wire diameter floor by several micrometers. Shaving those micrometers across 150 cuts per ingot generates additional wafers from the exact same silicon input, while reducing wire breakage and machine downtime.
The underlying unit economics are straightforward. For a silicon wafer manufacturer, the cost of the raw ingot is already sunk; any additional wafers extracted from that ingot drop straight to gross margin. Scaled across a global industry producing hundreds of gigawatts of wafers annually, aggregate silicon savings are substantial. This economic payback explains why wafer producers willingly paid a steep premium for wire made from tungsten โ a metal commanding a price multiple over steel โ and why adoption accelerated rapidly once commercial reliability was proven.
However, manufacturing fine tungsten wire presents a formidable metallurgical hurdle. Tungsten is inherently brittle and notoriously difficult to draw. Transforming a sintered rod into a continuous, defect-free filament tens of micrometers thick โ maintaining uniform surface properties across thousands of kilometers so diamond coatings adhere evenly โ required decades of process engineering at Xiamen Tungsten's wire manufacturing subsidiary, ๅฆ้จ่น้นญ Xiamen Honglu.
The enterprise holds more than ten invention and utility model patents covering fine wire production with fully self-owned intellectual property, and its 2025 research achievements included a provincially recognized project on high-strength tungsten alloy microwire for silicon wafer cutting.1
The physical scale of this manufacturing achievement is substantial. A 30-micrometer tungsten wire is roughly one-third the thickness of a human hair. In 2025, the company sold 129.2 billion meters of fine wire โ enough, laid end to end, to span the distance to the sun and back more than four hundred times.5 Operating reliably at scale requires every meter of filament to remain free of microscopic defects that could cause high-speed snapping during production.
This technical advantage translated into market dominance. The company reported that its share of the photovoltaic fine tungsten wire market exceeded 80% in 2025, establishing a globally leading position.1 In a solar manufacturing sector characterized by intense price competition, controlling four-fifths of a critical consumable represents a rare competitive position.
Yet headline market share masks a more complex economic reality.
In 2025, fine tungsten wire sales volume totaled 129.2 billion meters, of which 102.3 billion meters went directly to solar photovoltaic applications. Total fine wire sales volume declined 4.62% year over year, while production fell 6.12%.5 Xiamen Honglu reported annual revenue of RMB 4.318 billion, up 9.43%, and net profit of RMB 984 million, up 4.46%.5
Evaluating these metrics together reveals a clear structural shift. Volume contracted, revenue expansion was driven entirely by price adjustments, and net profit growth stalled. In a year when primary tungsten concentrate prices surged roughly 60% and group-level net profit rose 35%, Xiamen Tungsten's highest-margin niche product generated virtually flat earnings growth.
This divergence stemmed from downstream end-market conditions rather than operational execution. China's national silicon wafer output fell 9.69% in 2025 to 680 gigawatts, according to the China Photovoltaic Industry Association,1 as the broader solar supply chain entered a major consolidation cycle. Market penetration of tungsten wire continued to increase โ explaining why the subsidiary's volume declined by only 4.6% while overall wafer output dropped nearly 10% โ but expanding market share within a shrinking end market offers limited top-line momentum. Management also noted a product mix shift toward selling cold-drawing feedstock wire to external converters rather than finished cut wire, increasing sales of lower-value-added intermediate products.5
Raw material cost inflation introduced an additional margin headwind. Because tungsten wire is composed of pure metal, a tripling in tungsten concentrate prices directly inflates feedstock costs for the company's highest-margin division.
Management mitigated this exposure by adjusting selling prices dynamically in line with raw material movements.5 However, a product whose price tracks input costs remains linked to the broader commodity cycle; its percentage gross margin compresses mechanically when raw material prices rise faster than manufacturing value-add, even if absolute dollar margin per meter remains stable.
Who else is trying. The key strategic question is whether an 80% market share remains defensible over a full industry cycle. Management attributes its competitive moat to superior wire toughness, fine diameter capability, and low breakage rates, underpinned by a fully self-owned patent portfolio and integrated capabilities spanning alloy development, wire drawing, specialized equipment design, and large-scale manufacturing.1
This competitive defense relies primarily on accumulated tacit process knowledge rather than any single patent. The critical test for investors is quantitative: if a competitor achieves comparable cutting yields at equivalent wire diameters and Xiamen Tungsten's market share declines noticeably below 80%, the process-power thesis weakens.
Conversely, if market share remains stable while commercial wire diameters shrink further into the sub-30-micrometer range, the company's process engineering edge will be validated. Annual market share disclosures will provide the primary empirical test of this capability.
Financial disclosure constraints complicate precise margin analysis. While Xiamen Tungsten includes revenue and gross margin charts for fine wire in its annual reports, the underlying segment percentages are displayed graphically without explicit numerical values in the text.5 Nevertheless, disclosed subsidiary metrics show Xiamen Honglu converting 22.79% of revenue into net profit in 2025 โ a return profile far exceeding the parent group's overall 5% net margin and consistent with substantially elevated segment gross margins.
In summary, photovoltaic tungsten wire represents a genuine process-power business featuring market leadership and strong unit economics. However, it has reached market maturity, leaving future volume growth dependent on broader Chinese solar wafer production. As 2025 results demonstrated, market share gains alone can no longer fully offset downstream demand contractions.
To hedge against solar market cyclicality, Xiamen Tungsten has begun expanding fine tungsten wire into alternative industrial applications, including cut-resistant fabrics, precision screen printing, automotive glass manufacturing, medical devices, and vacuum coating filaments, with management reporting rapid early growth across these non-solar segments.1 While this diversification strategy addresses end-market concentration, its capacity to replace solar volume scale remains unproven.
Xiamen Tungsten faced a similar question regarding upstream raw material control in another strategic metal โ but in that instance, the outcome was determined by central policy in Beijing rather than by laboratory process engineering.
VII. Rare Earth Restructuring & State-Orchestrated Consolidation (01:35 โ 01:45)
On September 24, 2023, Xiamen Tungsten signed a cooperation framework agreement with state-owned enterprise ไธญๅฝ็จๅ้ๅข China Rare Earth Group. The terms were straightforward and, for a public company's minority shareholders, striking: two joint ventures would be formed to operate the rare-earth mining and smelting-and-separation operations controlled by Xiamen Tungsten and its parent. China Rare Earth Group would take a 51% controlling stake, leaving Xiamen Tungsten with 49%.14
That structure effectively surrendered operational control over the company's upstream rare-earth assets to a central state conglomerate. On December 18, 2023, the mining joint venture, ไธญ็จๅฆ้จ๏ผ็ฆๅปบ๏ผ็จๅ็ฟไธๆ้ๅ
ฌๅธ, was formally registered with RMB 60 million in registered capital under that 51/49 ownership split.15
The agreement outlined specific operational targets: maintaining long-term mineable reserves under Fujian mining licenses above 200,000 tonnes of rare-earth oxide, and developing 5,000 to 10,000 tonnes of new separation capacity in Fujian within two to three years of establishing the venture.14
Interpreting this restructuring solely as a corporate concession misjudges the direction of Chinese industrial policy. Since the 2010s, Beijing has progressively consolidated rare-earth extraction and separation licenses under a select group of state-owned entities. In 2025, the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the Ministry of Natural Resources jointly enacted interim rules governing total-volume controls on rare-earth mining and separation, codifying that extraction and processing qualifications would generally be restricted to designated state-backed rare-earth groups. Consequently, annual mining and separation quotas were no longer published openly.1 Further tightening regulatory oversight, China introduced export controls on April 4, 2025, covering seven medium and heavy rare-earth elements, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.1
Under this regulatory environment, a provincial state-owned enterprise holding 100% of a rare-earth mine faces perpetual licensing risk. Surrendering majority equity to the designated national champion converts a regulatory vulnerability into policy alignment โ trading direct equity control for long-term operational permanence.
Xiamen Tungsten retained control further downstream in the value chain, where margin density resides. The enterprise continues expanding its permanent magnet operations, manufacturing neodymium-iron-boron (NdFeB) magnets used in electric vehicle traction motors, wind turbine generators, and robotic actuators. The first phase of a 20,000-tonne high-performance NdFeB magnet facility in Baotou entered service in June 2025. Management noted in May 2026 that total magnet production capacity reached 20,000 tonnes at full run-rate in December 2025, with a second-phase 5,000-tonne expansion planned for 2026.513 Seeking further downstream integration, the company increased its equity interest in ๅฆ้จ็ตๆบ XTC Motor from 40% to 51% in November 2025 for RMB 251.2 million, consolidating the electric motor manufacturer into its rare-earth division.5
The operational scope of the 49% minority stake remains tied to feedstock security. While the framework covers Fujian mining development, smelting, separation, downstream supply commitments, an industry fund, and research collaboration,14 Xiamen Tungsten maintains a barbell operating model: holding strategic minority positions upstream in mining and separation while retaining majority control across high-purity oxides, metal processing, luminescent materials, high-performance magnets, and photoelectric crystals โ alongside a separate separation alliance with ๅๆน็จๅ Northern Rare Earth.1 This configuration leaves regulatory compliance and capital-intensive extraction upstream while concentrating capital in downstream precision manufacturing.
Financial performance across the division highlights two key operational constraints. First, segment profitability remains modest. Pre-tax profit for the rare-earth segment grew 4.78% in 2025; excluding a prior-year asset disposal gain, underlying pre-tax profit rose 52.91%, illustrating how past asset sales have distorted baseline operational earnings.5 Second, raw material price volatility continues to press margins. In 2025, praseodymium-neodymium oxide prices rose 24.42% to average RMB 489,200 per tonne, while dysprosium oxide prices fell 12.04%.1 Magnet producers faced margin compression between rising light rare-earth feedstock costs and downstream customer pricing pressure, driving Xiamen Tungsten to accelerate customer pilot testing for its newly developed heavy-rare-earth-free magnet formulations.5
Ultimately, the joint venture structure represents a pragmatic trade-off. Xiamen Tungsten accepted a minority equity position in exchange for regulatory alignment with the national license holder, guaranteed local capacity investment, and long-term raw material security for its wholly owned magnet business. In an industry constrained primarily by government quotas rather than capital or geology, exchanging direct equity for regulatory permanence reflects practical policy adaptation. For investors, however, the strategic implication is clear: while the rare-earth division secures feedstock and offers optionality on expanding electric motor and robotics demand, it currently generates a minor share of consolidated returns.
The broader question of how corporate governance aligns these state-directed priorities with shareholder returns turns to the boardroom.
VIII. Management Credibility, Governance & Capital Deployment (01:45 โ 02:00)
On April 22, 2026, the board of Xiamen Tungsten convened its twenty-seventh meeting of the tenth session and accepted the resignation of its chairman. ้ป้ฟๅบ Huang Changgeng had reached statutory retirement age. He had held the chair since April 16, 2015.16
The biography in the annual report is worth reading slowly, because it explains a great deal about how this company behaves. Huang began his career as a technician in the tungsten workshop of the old Xiamen Tungsten Factory.
From there: shift section chief, head of the copper office, deputy workshop director, workshop director, branch party secretary, deputy factory head, deputy general manager, vice president, vice president concurrently running the Haicang branch, executive vice president, president, director, party secretary โ and finally chairman.5 Forty years, one company, starting on the shop floor of the tungsten workshop.
His successor's path is almost identical. ้ๅฏ็ฅฅ Zhong Kexiang, 53, a doctorate holder and professor-level senior engineer, began as a shift leader in the same tungsten workshop, then Youth League secretary, deputy workshop director, manufacturing department manager and party branch secretary, general manager of ๅฆ้จๅ้นญ้ๅฑ Xiamen Jialu Metal, party deputy secretary and discipline inspection secretary of the listed company, general manager of ้ฟๆฑ้้พ็จๅ Changting Jinlong Rare Earth, vice president, and executive vice president from April 2021.5 He joined the board in May 2024 and was elected chairman on April 22, 2026, becoming legal representative, with a term running to May 9, 2027.16
President ๅด้ซๆฝฎ Wu Gaochao, 59, came up the other pillar: technician at GESAC, electromechanical department manager, business department manager, deputy general manager, general manager โ then vice president, discipline inspection secretary and executive vice president of the parent before becoming president in April 2015.5
What this produces is deep operational literacy and, equally, deep institutional conservatism. There is no outsider in the executive suite. The succession involved no strategic reset โ Zhong was promoted from executive vice president, having sat on the board for two years. Investors who value continuity will read this as low key-person risk. Investors looking for a catalyst should note that a management team drawn entirely from the tungsten workshop is unlikely to originate a radical portfolio decision, such as fully separating the battery business or exiting rare earths.
The ownership structure reinforces that. In May 2025 the province created ็ฆๅปบ็ๅทฅไธๆง่ก้ๅขๆ้ๅ
ฌๅธ Fujian Industrial Holdings Group, a wholly state-owned company established by the Fujian provincial SASAC with registered capital of RMB 8 billion; it became the indirect controlling shareholder through Fujian Rare Earth (Group) and related entities.8 So the ultimate decision-maker is a provincial government asset regulator.
Then there is a governance feature that has no analogue in Western markets. ไบ็ฟๆ่ฒ้ๅฑ่กไปฝๆ้ๅ
ฌๅธ Minmetals Nonferrous Metals held 7.68% of Xiamen Tungsten at the end of 2025 โ and executives of China Tungsten & High-Tech, the Minmetals-controlled competitor, have served as vice-chairmen of Xiamen Tungsten's board.
็ไธน Wang Dan, currently a China Tungsten & High-Tech deputy general manager and board secretary, held the vice-chairmanship from April 2021 to December 2025; ็็็ Wang Yuzhen, also of China Tungsten & High-Tech, currently holds it.5 The company's principal domestic competitor sits at its board table. Under Chinese SOE convention this is unremarkable cross-holding. To an outside minority investor it is a legitimate question about competitive information flow and whose interests a vice-chairman represents.
On management systems. The company describes four management pillars it has been building for years: comprehensive budget management, target performance management, Integrated Product Development, and what it calls International Advanced Manufacturing. In 2025 it rolled IPD to a 2.0 version with full product life-cycle management, and reported eight subsidiaries going live on customer relationship management systems.1 The vocabulary is recognisably borrowed from ๅไธบ Huawei's management canon, which is common among Chinese industrial firms.
The relevant question for an investor is not whether the frameworks are fashionable but whether they show up in the accounts: cemented carbide and tool volume growth outpacing the market, and gross margin expanding through a 60% input inflation, are at least consistent with an operating system that works. Whether they survive a downturn is the real test.
On research spending. R&D expenditure reached RMB 1.740 billion in 2025, up 16.61% and equal to 3.76% of revenue, and the company added 577 newly authorised patents.15 For a materials business, 3.76% is a serious commitment โ and the fact that none of it was capitalised means reported profit is not being flattered by deferring development cost to the balance sheet. That is a small, checkable signal of accounting conservatism, and it is the kind of thing worth noticing precisely because it is boring.
On capital returns. For 2025 the board proposed a final dividend of RMB 4 per 10 shares, taking total cash distributions for the year to RMB 927.15 million, or 40.15% of net profit attributable to shareholders, and separately committed to an interim 2026 dividend of at least 30% of interim net profit.14 A forty-percent payout while funding mine construction, five battery plants, a Thai carbide base, a European acquisition and a magnet expansion is a defensible balance.
The scale of what that payout is competing against is worth spelling out, because it is where the real capital allocation tension sits. During 2025 the company was simultaneously advancing the Guangxi Bobai mine build, technical upgrades and deep exploration at existing mines, a cemented carbide industrial park, the Dingsheng molybdenum oxide base which reached production, a rare earth secondary resource recovery project which entered trial production, the Baotou magnet base whose first phase was commissioned in June 2025, five separate XTC New Energy production bases, a cutting tool expansion and a tungsten wire expansion โ plus a Korean waste-tungsten base whose sodium tungstate line reached design output and the Thai carbide facility.5
In April 2026 the board approved a further RMB 734.29 million for a 40,000-tonne lithium iron (manganese) phosphate project at the Yaan base.5 That is a very long list for a company generating under RMB 3 billion of operating cash flow.
It is funded partly by the subsidiary listings and partly by debt โ finance costs actually fell 5.46% in 2025 on lower interest-bearing debt and cheaper funding, which suggests the balance sheet is not yet strained.5 But the breadth of simultaneous expansion is exactly what a sceptic means by diworsification risk, and it is the reason the return-on-equity trend deserves more attention than the profit growth headline.
On alignment. The company runs employee stock ownership plans at the parent level and equity incentives at subsidiaries. But two 2025 disclosures cut against a purely positive reading: a repurchase-and-cancellation of restricted shares under the equity incentive plan, and an extension of the third employee stock ownership plan's duration.5 Extending an ESOP's term is most commonly done when the plan is not in the money at expiry. Neither is damning; both are the kind of detail worth checking against the plan's original vesting conditions before treating incentive alignment as demonstrated.
On disclosure and narrative consistency. Here the record is genuinely good in places and thin in others. The FY2025 report explicitly separated out the prior-year disposal gain when explaining rare earth profit growth, restated 2024 segment data on a like-for-like basis after two internal reorganisations, and disclosed that all RMB 1.740 billion of R&D spending was expensed with zero capitalised โ a conservative choice that many peers do not make.5 Management has also been consistent across periods about battery margin pressure rather than blaming one-off factors.
Against that, Chinese A-share convention means there is no Western-style earnings call transcript with adversarial analyst Q&A. The company hosted 232 institutions including ้ซๆฏ
่ตไบง Gao Yi Asset Management in its post-results briefing running from April 24 to May 15, 2026, but the published record is largely prepared disclosure rather than exchanges under challenge.1813 Investors cannot watch management being pressed. That is a real limitation on assessing credibility, and it should temper confidence in forward statements in either direction.
On the Japanese shareholder. One more governance detail rewards attention. A.L.M.T. Corp., the Japanese hard-metals producer descended from the original 1989 GESAC partner, still held 3.19% at end-2025 โ the fourth-largest holder after the state parent, Minmetals Nonferrous and Hong Kong Securities Clearing.5 A foreign strategic shareholder that has stayed on the register for decades is a mild but genuine positive signal about the technical relationship, and it is unusual for a Chinese provincial SOE.
It also sits awkwardly alongside China's tightening dual-use export controls, which in 2025 covered tungsten powder, molybdenum powder and high-density alloys, and which have already created friction for Japanese tungsten buyers.1 Cross-border industrial partnerships in controlled materials are getting harder, not easier.
The activist stress test. A sceptical investor would raise four things. First, portfolio complexity: three unrelated businesses, four listed-or-partially-owned profit pools, and minority interests on the best assets, which together make the consolidated accounts a poor guide to shareholder economics. Second, the legacy property business โ ๅฆ้จๆป็้ Xiamen Tengwangge posted a RMB 144.8 million net loss in 2025 and the group's real estate line lost RMB 148 million pre-tax, with projects in Zhangzhou and Dongshan still being disposed of.5 Management has been running this exit for years; the honest verdict is that it is directionally right and slow.
Third, working capital: operating cash flow of RMB 2.971 billion in 2025 actually fell 2.87% despite a 35% rise in profit, because a commodity price boom absorbs cash into inventory and receivables.4 In Q1 2026, operating cash flow weakened materially again even as profit exploded. Fourth, and most concrete, the related-party mine deal now in front of them.
IX. The Investor Playbook: 7 Powers, Porter's 5 Forces, & Bull vs. Bear Case (02:00 โ 02:15)
That transaction, disclosed in late March 2026, is where strategic frameworks collide with legal and corporate reality.
On March 25 and 26, 2026, Xiamen Tungsten announced a tripartite cooperation agreement with Fujian Industrial Holdings Group and ๆฑ่ฅฟ้จไธๆง่ก้ๅข Jiangxi Tungsten Holdings Group to acquire a 30.1683% stake in ๆฑ่ฅฟๅทจ้ๅฎไธๆ้ๅ
ฌๅธ Jiangxi Jutong Industrial, owner of the world-scale ๅคงๆนๅก Dahutang tungsten deposit. Dahutang's northern and southern mining areas hold preserved resources of roughly 1.383 million tonnes of tungsten trioxide and 33,000 tonnes of molybdenum.
A preliminary draft valuation assessed Jiangxi Jutong's total equity at approximately RMB 1.966 billion, pending approval from Fujian's State-owned Assets Supervision and Administration Commission (SASAC). Because Fujian Industrial Holdings indirectly controls 85.1683% of Jutong, the purchase represents a related-party transaction, though management stated it does not expect the acquisition to trigger major asset restructuring thresholds.8
Securing Dahutang would directly address Xiamen Tungsten's primary strategic weakness: its structural reliance on merchant concentrate.
However, legal complications quickly emerged. On May 20, 2026, the company disclosed that ไฟฎๆฐดๅฟๅทจ้ๆ่ตๆง่ก Xiushui County Jutong Investment Holding had filed a lawsuit against Jiangxi Jutong and Fujian Rare Earth (Group). The suit asks the court to confirm Xiushui Jutong as the rightful owner of a 48% stake in Jiangxi Jutong registered under Fujian Rare Earth's name since November 28, 2014, and to invalidate the underlying shareholder resolution from that date.
ๅฆ้จไธ่น้จ้ผ Xiamen Sanhong Tungsten & Molybdenum was named as a third party.19 On June 26, 2026, the Wuning County People's Court addressed jurisdictional challenges by transferring the case to the Siming District People's Court in Xiamen. Xiamen Tungsten stated it is not a direct party to the litigation and expects no adverse impact on current or future earnings or routine operations, while acknowledging uncertainty surrounding the equity transfer.20
This legal dispute defines the current reality: the company's single most significant strategic growth initiative depends on a related-party deal, priced by its controlling shareholder's regulator, involving an asset entangled in litigation over a twelve-year-old ownership resolution. Consequently, investors must evaluate this potential boost to raw-material self-sufficiency as an unpriced option rather than a completed transaction.
Myth versus reality. Four common market narratives surrounding the company require examination against its disclosures.
Myth: Xiamen Tungsten is a pure leveraged play on raw tungsten prices. Reality: active captive mines produce roughly 12,000 tonnes of concentrate annually against much larger internal processing requirements, leading management to acknowledge in its annual report that internal mine output meets only a fraction of total demand.5 While surging concentrate prices boost mining profits, they simultaneously inflate feedstock costs for downstream manufacturing. The core business generates earnings by capturing processing spreads and maintaining discipline in passing raw material costs to customers, rather than relying solely on commodity price appreciation.
Myth: Xiamen Tungsten is primarily a rare-earth producer. Reality: rare-earth operations generated approximately 13% of primary revenue and 7% of gross profit in 2025, while majority control of its upstream mining and separation assets resides with a central state-owned enterprise.514 The surge in domestic retail interest โ reflected in the shareholder base expanding from 96,406 at the end of 2025 to 161,907 shortly before the annual report release โ reflects market narrative momentum rather than structural earnings drivers.5
Myth: The STAR Market battery spin-off unlocked net equity value for parent shareholders. Reality: while listing XTC New Energy created a dedicated capital-raising channel, it left the parent consolidating RMB 19.8 billion in sub-10% gross margin revenue while retaining just over half of the subsidiary's net earnings.5 The transaction expanded group capital access but diluted overall profit margins without boosting per-share earnings power.
Myth: Photovoltaic tungsten wire serves as the group's main volume growth driver. Reality: having secured a dominant market position, the division faces headwinds from a contracting solar supply chain, with sales volume declining in 2025.5 Fine wire remains a high-margin asset, but expanding volume requires a rebound in Chinese solar wafer manufacturing or accelerated adoption across non-solar industrial markets.
Hamilton Helmer's 7 Powers. Cornered resource advantages are genuine but incomplete. Quota-protected mining rights and established positions within national allocation systems represent high-barrier regulatory assets, yet internal mine supply covers only a portion of total raw material consumption โ underpinning the strategic rationale for acquiring Dahutang. Process power represents the company's strongest strategic moat, built on decades of proprietary metallurgy across ultra-fine tungsten powders, specialized carbide grades, and micro-wire drawing. This operational capability is reflected in an 80% market share in photovoltaic wire and 577 newly authorized patents in 2025.1 Scale economies provide structural advantages across tungsten and molybdenum refining as well as lithium cobalt oxide manufacturing, where the enterprise supplies nearly half of global demand.
Switching costs vary significantly across product lines: customer lock-in is substantial in high-precision micro-drills, aerospace tooling, and automotive machining, as well as in cathode qualifications with tier-one battery makers, but minimal in merchant intermediate powders and standardized chemicals. Strategic advantages from branding, network economies, or counter-positioning remain immaterial.
Porter's Five Forces. Threat of new entrants remains low. Strict government mining quotas limit upstream entry, while midstream refining and downstream tool manufacturing demand substantial capital and specialized process expertise. Buyer power is split by product line: customer leverage is low in tungsten products, where the group demonstrated significant pricing power during 2025's raw material inflation, but high in electric vehicle cathodes, where intense industry competition capped gross margins below 10% despite a 45% shipment expansion.
Supplier power exerts notable pressure across the organization. Because Xiamen Tungsten purchases most of its rare-earth feedstock, battery metals, and primary tungsten concentrate from external sources, input cost swings โ such as 2025's cobalt price increase โ directly affect manufacturing margins. Threat of substitutes is limited in primary applications: tungsten carbide remains indispensable for high-speed industrial cutting tools due to physical performance constraints, while fine tungsten wire faces no competitive alternative beyond the legacy steel wire it displaced. Industry rivalry is intense in battery materials and moderate in precision tooling, where major domestic producers maintained stable market shares throughout 2025.
Competitive positioning. A direct comparison with domestic peers highlights Xiamen Tungsten's distinct business model. China Tungsten & High-Tech operates as a focused tungsten producer, deriving a higher proportion of earnings from mining, powders, and advanced cutting tools, where its tooling gross margin reached 35.05% in 2025 โ surpassing Xiamen Tungsten's overall tungsten-and-molybdenum segment margin.10 Chongyi Zhangyuan Tungsten operates even further upstream. For investors seeking direct, un-diluted exposure to Chinese tungsten processing economics, Xiamen Tungsten offers a more complex corporate structure.
Conversely, Xiamen Tungsten possesses key operational assets that peers lack: a dominant position in photovoltaic wire, a leading molybdenum division, a global leadership share in consumer electronics LCO cathodes, and an integrated rare-earth magnet business. This multi-segment portfolio provides broader operational exposure, but produces a less concentrated income statement.
Financial metrics indicate that market valuations reflect a conglomerate discount rather than a growth premium. Xiamen Tungsten converted roughly 5.0% of total revenue into net profit in 2025, compared to 7.3% for China Tungsten & High-Tech, while group return on equity compressed over three consecutive years as management simultaneously expanded four distinct business lines.410
The bull case. First-quarter 2026 results demonstrated the group's earnings potential during a commodity upcycle. Revenue expanded 86.99% year over year to RMB 15.743 billion, while net profit attributable to shareholders surged 189.14% to RMB 1.107 billion, with non-recurring adjusted profit rising 198.64%. Divisionally, tungsten and molybdenum revenue grew 83.13%, energy materials increased 117.82%, and rare earths expanded 31.68%.21 Earnings expanded more than twice as fast as top-line sales, reflecting strong operational leverage across the group's fixed processing infrastructure.
Under favorable market conditions โ persistent structural tightness in raw tungsten, sustained international demand premiums for licensed Chinese exports, successful expansion of fine wire into non-solar industrial markets, and continued margin recovery in battery materials, as indicated by XTC's Q1 2026 revenue of RMB 6.585 billion and 79.17% net profit expansion โ consolidated earnings could establish a higher baseline.22
The bear case. Three core factors present potential headwinds to performance.
The first factor involves pricing dynamics. Domestic Chinese tungsten concentrate prices declined approximately 50% from their March 2026 peak, according to Fastmarkets, even as export prices maintained significant premiums.3 Strong first-quarter 2026 earnings coincided with peak commodity pricing; for a net consumer of tungsten concentrate, falling raw material prices reverse earlier inventory gains and lower realized prices, amplified by working capital adjustments.
The second factor centers on photovoltaic end-market demand. The 2025 volume decline in fine tungsten wire, alongside a 9.69% contraction in national solar wafer output, showed that market share dominance alone cannot insulate segment earnings from end-market downturns. If solar wafer production fails to recover or wafer thinning trends slow due to changing cell architectures, volume growth in this high-margin segment could stall.
The third factor involves regulatory and geopolitical dynamics. While export controls elevated Chinese tungsten prices in overseas markets, total Chinese tungsten product export volumes fell 27.51% in 2025 to 13,149 tonnes. Xiamen Tungsten specifically cited export controls when reporting year-over-year volume declines in merchant smelting products and tungsten powder.15 Sustained export restrictions also incentivize long-term overseas investment in alternative tungsten mining and recycling capacity, potentially eroding China's structural supply advantage over time.
Underlying these risks is working capital exposure during commodity price swings. Purchasing tungsten concentrate, cobalt, lithium, nickel, and rare earths for multi-stage processing requires substantial working capital commitments; as raw material costs escalate, capital tied up in inventory and receivables increases accordingly.
This working capital dynamic explains why Xiamen Tungsten reported a 34.89% surge in 2025 net profit alongside a 2.87% decline in operating cash flow.4 While management maintains a strict policy of low inventory and rapid turnover across its tungsten operations, the gap between reported net income and cash generation represents an inherent structural feature during commodity price spikes.5
These factors add to existing operational considerations: significant minority equity interests in core subsidiaries, litigation surrounding the Dahutang mine transaction, an ongoing exit from legacy real estate assets, and state-owned governance where strategic priorities extend beyond equity valuation.
X. Strategic Position, Key KPIs & What to Watch (02:15 โ 02:25)
Strip away the corporate three-pillar branding and the business model reduces to three distinct elements: a high-margin conversion franchise, a large low-margin volume processor that the parent only half owns, and a strategic state-aligned hedge. The franchise is tungsten and molybdenum metallurgy, which houses a high-return niche in ultra-fine wire. The volume business is battery cathode materials, and the hedge comprises rare earths and magnets.
To track whether this structural setup creates or dilutes value, three performance metrics matter far more than headline revenue.
First, tungsten and molybdenum segment gross margin, evaluated alongside cemented carbide and cutting tool volumes. This metric tests whether downstream pricing power is durable or merely a temporary windfall from commodity price volatility.
In FY2025, the segment expanded its gross margin by 1.87 percentage points despite primary tungsten concentrate prices inflating roughly 60%, while cemented carbide and cutting tool sales volumes grew by 13% and 16.24% respectively โ a combination of margin expansion and volume growth that distinguishes genuine market share gains from cost pass-through.5 A sustained margin compression during a period of normalizing tungsten prices would indicate that the 2025 expansion resulted from temporary inventory timing rather than structural pricing power.
Second, fine tungsten wire shipment volume, split between photovoltaic and non-photovoltaic applications. In FY2025, total fine wire shipments reached 129.2 billion meters, with 102.3 billion meters directed to solar wafer cutting โ both figures declining year over year and illustrating why fine wire represents a monitoring indicator rather than an unconstrained growth driver.5 With market share exceeding 80%, volume expansion depends on a recovery in Chinese solar wafer manufacturing or accelerated scaling across non-solar industrial markets. The shipment split between solar and non-solar applications provides the clearest measure of whether end-market diversification is taking hold.
Third, XTC New Energy's gross profit per tonne of cathode shipped. Top-line revenue and shipment growth in the battery materials segment provide limited insight into underlying profitability, given that total cathode shipments reached 142,700 tonnes in FY2025 while fourth-quarter gross margin stood at 9.90%.11 Calculating gross profit per unit shipped clarifies whether industry overcapacity is truly abating or whether top-line gains reflect pass-through commodity inflation. Investors can track this metric directly from XTC New Energy's disclosed shipment volumes and division-level gross profit.
Several conventional metrics are omitted from this core list for specific structural reasons. Consolidated revenue growth offers minimal analytical utility because it is heavily weighted by the half-owned, price-indexed battery cathode business. Headline net profit growth fluctuates with raw material inventory timing. Segment results from rare earths remain too small to alter group-level economics. Finally, short-term quarterly profit swings โ such as the first-quarter 2026 earnings expansion โ must be evaluated against prevailing benchmark metal prices during that specific reporting period rather than interpreted in isolation as structural operational gains.
Beyond these key indicators, three corporate catalysts warrant ongoing monitoring: first, the resolution of ownership litigation surrounding Jiangxi Jutong and whether the proposed Dahutang equity acquisition secures Fujian SASAC valuation approval and reaches completion; second, the formal closing and consolidation of the Mimatic acquisition in Germany, which had not been consolidated as of the FY2025 annual report and marks the enterprise's entry into European precision tooling; and third, whether the interim 2026 dividend payout fulfills management's stated commitment of at least 30% of interim net profit.517
A non-quantitative variable also warrants attention: the operational direction under the new chairman. Zhong Kexiang inherited a multi-part portfolio assembled under prior leadership โ a high-margin tungsten franchise, a half-owned battery cathode unit, a minority-partnered upstream rare earth operation, a residual real estate exit, and an uncompleted upstream mining transaction.
Having risen through internal operational roles before joining the board in 2024, the incoming executive leadership presents continuity rather than structural realignment. The company's disclosed operating plan prioritizes core operational objectives: strengthening raw material security, advancing cemented carbide and tooling products toward high-precision applications, consolidating leadership in photovoltaic tungsten wire, expanding international rare earth raw material channels, and building overseas battery materials capacity.1
A notable element of this strategic plan involves pilot initiatives aimed at "industrial services" and "digital operations" โ transitioning from selling standalone tooling products to delivering integrated machining outcomes.1 If implemented successfully across the tooling business, this service model could enhance customer retention and pricing power. Conversely, if execution falters, the initiative will have negligible financial impact. Future financial disclosures will indicate whether service-based revenues gain meaningful traction within the overall tooling product mix.
In summary, Xiamen Tungsten represents neither the direct critical-minerals play envisioned by its domestic retail investor base โ which expanded from 96,406 accounts at year-end 2025 to 161,907 shortly before the annual report release โ nor the battery materials producer suggested by its top-line revenue composition.5 Instead, the enterprise functions as a state-anchored metallurgy platform. Its core earnings depend on a quota-protected conversion franchise, its highest-margin product segment holds dominant market share within a cyclical downstream industry, and its primary raw-material growth catalyst rests on an uncompleted asset acquisition subject to legal dispute.
The earnings power of the core tungsten franchise remains established and supported by empirical results. However, the secondary growth initiatives surrounding the core โ including fine wire market diversification, downstream magnet integration, battery cathode margin recovery, and captive mine supply expansion โ represent ongoing strategic execution rather than fully realized outcomes as of August 2026.
References
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Xiamen Tungsten Co., Ltd. 2025 Annual Report Summary (PDF) โ Shanghai Stock Exchange, 2026-04-24 ↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩
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Chinese tungsten product prices surge over 200% in 2025 amid export controls, fresh demand โ Fastmarkets ↩↩
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Tungsten markets fragmenting as domestic Chinese APT market diverges from exports โ Fastmarkets, 2026-06 ↩↩
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Xiamen Tungsten Co., Ltd. 2025 Annual Report Summary โ Shanghai Securities News, 2026-04-24 ↩↩↩↩↩↩↩
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Xiamen Tungsten Co., Ltd. 2025 Annual Report (full text, PDF) โ Shanghai Stock Exchange, 2026-04-24 ↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩↩
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Xiamen Tungsten Co., Ltd. Company Profile โ China Securities Net (cnstock), 2022-04 ↩↩↩
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Tungsten Statistics and Information โ U.S. Geological Survey, National Minerals Information Center ↩
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Announcement on the Signing of a Tripartite Cooperation Agreement (No. ไธด-2026-026, PDF) โ Xiamen Tungsten Co., Ltd., 2026-03-26 ↩↩↩
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Xiamen Golden Egret Special Alloy Co., Ltd. (GESAC) Corporate Profile and Product Catalog ↩
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China Tungsten & High-Tech Materials (000657) 2025 Balance Sheet, Revenue, Cost and Product Segment Data โ Huaon Industry Research ↩↩↩
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XTC New Energy Materials (688778) 2025 Annual Report and 2026 Q1 Report Review โ China Finance Information ↩↩↩↩
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XTC New Energy Materials Initial Public Offering and STAR Market Listing Announcement โ Sina Finance / Shanghai Stock Exchange, 2021-08 ↩
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Xiamen Tungsten hosts Gao Yi Asset and 232 institutions; Q1 2026 net profit up 189% with growth across three businesses โ Sina Finance, 2026-05-15 ↩↩↩↩
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Xiamen Tungsten signs cooperation framework agreement with China Rare Earth Group โ China Securities Net (cnstock), 2023-09 ↩↩↩↩
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China Rare Earth and Xiamen Tungsten joint venture established with registered capital of RMB 60 million โ National Business Daily, 2023-12-21 ↩
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Xiamen Tungsten: Announcement on Chairman's Resignation, Election of Chairman and Change of Legal Representative โ Sina Finance, 2026-04-23 ↩↩
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Xiamen Tungsten Co., Ltd. 2025 Annual Report Summary โ Shanghai Stock Exchange disclosure portal ↩
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Xiamen Tungsten: Investor Activity Record (including 2025 Annual and 2026 Q1 Results Briefing), 2026-ๆๅ ณ-003 โ Sina Finance ↩
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Xiamen Tungsten acquisition target sued: Xiushui Jutong claims actual ownership of 48% of Jiangxi Jutong โ Tencent News, 2026-05-19 ↩
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Xiamen Tungsten Co., Ltd. Announcement on Progress of Litigation Involving Partial Equity Acquisition Target โ Shanghai Securities News, 2026-06-30 ↩
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Xiamen Tungsten (600549.SH) Q1 net profit RMB 1.107 billion, up 189.14% โ Sina Finance, 2026-04-23 ↩
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XTC New Energy Materials 2026 First Quarter Report โ Shanghai Securities News, 2026-04-23 ↩
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