On July 29th, Northern Rare Earth (600111.SH) officially confirmed on the interactive platform that its affiliated enterprise Baogang Co., Ltd. (600010.SH) successfully won the contract for the supply of key materials for the Yarlung Zangbo River Lower Basin Hydropower Project. It will provide 62,000 tons of rare earth alloy steel for this national super project. This winning bid marks that Baogang Co., Ltd. has once again entered the supply chain of national strategic projects after the Qinghai-Tibet Railway and the Three Gorges Project, highlighting the top-notch strength of China's rare earth steel technology in the field of extreme environment infrastructure construction. The Yarlung Zangbo River Lower Basin Hydropower Project is China's largest infrastructure project, with a total investment of 1.2 trillion yuan, planning to build 5 cascade power stations with a total installed capacity of 60 million to 81 million kilowatts (equivalent to 3 of the Three Gorges power stations), generating 300 billion kilowatt-hours of electricity per year, which can replace 90 million tons of standard coal. According to the China Special Steel Association's estimation, the project will drive a demand for 4 million to 6 million tons of special steel, with high-strength corrosion-resistant structural steel and rare earth alloy steel accounting for over 70%. The rare earth alloy steel won by Baogang Co., Ltd. this time will mainly be used for core parts such as ultra-deep tunnel support and high-pressure water pipeline, facing extreme environmental challenges such as high-altitude strong corrosion, strong earthquake zones, and -30°C low-temperature freeze-thaw. Baogang Co., Ltd. won the bid by leveraging three core technologies: Firstly, by adding lanthanum and cerium rare earth elements (supplied exclusively by Northern Rare Earth), the corrosion resistance of the steel is enhanced by 50%, the yield strength exceeds 690 MPa, far exceeding the 355 MPa standard of ordinary steel, and the service life is extended to 60 years; Secondly, it adopts the "controlled rolling and cooling + online heat treatment" technology, maintaining the impact toughness retention rate of the steel in extremely cold environments over 95%, overcoming the problem of high-altitude freeze-thaw; Thirdly, the product has been verified in major projects such as the frozen soil section of the Qinghai-Tibet Railway (no fractures in 15 years) and the Russian-Chinese East Pipeline Gas Project (zero corrosion leakage), with a cumulative service mileage of over 3,000 kilometers. This winning bid also highlights the synergy effect of the "rare earth + steel" dual-wheel drive of Baogang Group. Baogang Co., Ltd. has a 17.5 million-ton iron steel supply capacity, and the Xi'an base can produce 500,000 tons of special steel annually. The 62,000-ton order only accounts for 15% of its monthly production capacity, with sufficient delivery flexibility; at the same time, Northern Rare Earth plans to supply 390,000 tons of rare earth concentrate in 2025, providing stable raw materials for the rare earth alloy steel. Minsheng Securities estimates that the rare earth alloy steel is priced about 800 to 1,200 yuan per ton higher than ordinary steel, and based on the order volume, it can increase profits by 49.6 million to 74.4 million yuan, accounting for 8.3% to 12.4% of Baogang Co., Ltd.'s 2024 net profit.
This breakthrough comes at a time when the steel industry is undergoing a deep adjustment. The national "supply-side structural reform in the steel industry" policy has been intensified, with a plan to eliminate 30 million tons of backward production capacity by 2025, and high-value-added special steel has become the main battlefield of competition. The market reaction was swift, with Baogang Co., Ltd.'s stock price surging by 5.16% on July 29th after the announcement, with its total market value returning to 120 billion yuan, and Northbound funds increasing their holdings by 172 million yuan in a single day. In the next ten years, Baogang Co., Ltd. will embark on a technological leap with the Yarlung Zangbo River Project as the starting point: jointly formulate the "National Standard for Rare Earth Alloy Steel for Extreme Environments in the Plateau", promoting China's technical norms to penetrate into the China-Pakistan Economic Corridor and Nepalese hydropower projects; develop 1100 MPa grade deep-sea pipeline steel, targeting the development of the South China Sea oil and gas fields, with the goal of replacing imported shares by 30% in 2026; invest 4.2 billion yuan to build a hydrogen-based vertical furnace, and achieve a 65% carbon emission reduction in special steel production in 2027, breaking through the EU carbon tariff barriers. As the first truck of rare earth alloy steel heads towards the Himalayas, China's steel industry is transforming from a "production leader" to a "technology benchmark". As an engineering materials expert said: "Super projects refine super materials, and super materials will ultimately define new super projects." The winning bid by Baogang Co., Ltd. is precisely the testimony of this transformation era.
