Strategy Financial Relations Limited

	2001 Interim Results

	China Rare Earth Holdings Limited

	10/9/2001

CHINA RARE EARTH ANNOUNCES 2001 INTERIM RESULTS
TURNOVER REACHES HK$333 MILLION
PROFIT SURGES 38% TO HK$79 MILLION
* * *
CONTINUES TO EXPAND VERTICAL BUSINESSES AND
EXPLORE WORLD MARKETS

(Hong Kong, 10th September 2001) - China Rare Earth Holdings Limited ("CREH" / the "Group") (stock code: 0769), the leading manufacturer of rare earth and refractory products in Hong Kong, today announced its interim results for the six months ended 30th June 2001.

For the six months ended 30th June 2001, the Group recorded a turnover of HK$333 million, representing an increase of 38% compared to the HK$242 million recorded in the previous corresponding period. Sales of rare earth products and refractory materials amounted to HK$212 million and HK$121 million respectively and increased by 25% and 66%, respectively, compared to figures recorded for the six months ended 30th June 2000. Profit increased 38% to HK$79 million. The net profit margin was 23%. Basic earnings per share reached HK11.46 cents.

The Board of Directors recommended an interim dividend payment of HK2 cents per share, compared with HK1cent per share in the previous corresponding period.

In view of the persistent strong growth in the Group's turnover, Mr. Jiang Quanlong, Chairman of CRE said, "The strong growth in turnover was mainly attributable to the Group's expansion in production facilities to meet customer demand. Our leading market position, long-term and stable customer base and quality value-added products have been able to secure our further development. During the review period, we strengthened our cooperation with a leading player in the global refractory materials industry. This cooperation intensified the Group's development pace in the production of refractory materials, with many new products being developed. In June, the Group inaugurated its rare earth separating production line for ionic ore, further enhancing the Group's annual production capacity and product quality. We are confident that this will bring further profitable contributions to the Group. "

During the review period, the global economic slow down and the sluggish information technology industry impacted on rare earth market prices. However, Mr. Jiang showed strong confidence in the Group's performance and future business prospects: "The downward adjustment in the prices of the Group's value-added quality products were much lower than that of lower-end products from other manufacturers. Additionally, supported by our stable customer base, the Group has still recorded strong growth in turnover. We are fully confident of profit growth this year."

Turning to the refractory products business, the Group's quality refractory materials meet the PRC's development requirements for the North-West Plan, which places heavy demand for quality steels products. At the same time, the developments coincides with many steel and metal tundishes and blast furnaces which are experiencing a period of repairs. As a result, sales increased significantly.

The Group's current annual production capacity for rare earth is 6,500 tonnes (REO) while the production of refractory materials reached 50,000 tonnes. In the first half of 2001, about 69% of the Group's rare earth products were exported to the United States, Japan, Europe and other regions. The export ratio to Europe is also achieving steady and constant growth. Around 11% of refractory products were exported overseas, the export ratio expected to contribute a gradual increase from the current 10% to 50% over the next few years, further enhancing the market share of the Group's refractory materials.

In the next two years, the Group will further expand its production of refractory materials and the development of downstream rare earth products. The Group plans to invest HK$100,000,000 to commence the second phase of expansion plans for its production facilities in refractory materials which is expected to be completed in the first half of next year. Upon completion, the annual production capacity of refractory materials will surge from 50,000 tonnes to 80,000 tonnes. At the same time, the Group's expansion of its rare earth metal production line has been scheduled to commence in the fourth quarter of the year, when the production capacity will surge to 1,000 tonnes.

The Group is continuously exploring vertical businesses and is committed to studying plans to stabilize its rare earth resources and the supply of raw materials of its refractory business, further enhancing cost-efficiencies. The Group will also dedicate tremendous effort to enhancing its quality control and R&D capabilities, introducing the most advanced techniques as well as appointing & training professional talent to reinforce the Group's solid foundations.

Mr Jiang concluded, "The PRC will soon join the World Trade Organization, which will further intensify the globalization of the world's economies, resulting in the opening up of the PRC market. This will continue to boost the requirement for rare earth materials and spur its applications. With regard to refractory materials, production will steadily move from the more developed countries to the PRC. The Group will seize these opportunities to expand its scope for rare earth materials application, particularly in the exploration and production of rare earth luminous materials. The Group will also increase the production of quality refractory products, expanding export markets, enlarging business scales and boosting market share."

About China Rare Earth Holdings Limited
China Rare Earth Holdings Limited commenced listing on the Stock Exchange of Hong Kong Limited in October 1999. The Group will be included as a constituent stock in the Mainland Series of the Hand Seng Composite Index from 3rd October 2001. CRE is the first Chinese private firm, listed outside the mainland, engaging in the manufacture of rare earth and refractory products. The industrial applications for rare earth products range from traditional industries such as steel, metallurgy, construction, glass, petrochemical and many high-tech industries. Refractory products are used extensively in the petrochemical, metallurgy, heat-ferrous metallurgy, glass, construction, chemical fertiliser and ceramics industries. Most of its customers are large companies such as GE, OSRAM, Samsung, MQ, New Japan Steel and Shanghai Baoshan Steel.