Mining of rare earths in China. File photo: VCG

A Chinese company that specializes in tungsten products and rare earths on Monday reported a sharp decline in overall profit, but a surge in profit from its rare-earth business, as the metals essential for high-tech products become a hot commodity amid trade tensions.

Xiamen Tungsten Co said in a stock filing that overall profits sank 76.83 percent year-on-year to 77.4 million yuan ($11.26 million) in the first half of 2019 due to declining orders and prices for its tungsten products.

However, profit from its rare-earth business was up 240.54 percent to about 16.56 million yuan, due to China's restrictions on rare-earths imports that have led to a decline of rare-earth supplies and rising prices, according to the filing to the Shanghai Stock Exchange.

Chinese regulators have in recent weeks moved to restrict imports of rare earths from Myanmar, part of an effort to tackle oversupply in the domestic industry that has pushed down prices and troubled companies, according to media reports.

In 2018, China imported 26,000 tons of rare-earth carbonates from Myanmar, which accounted for 25 percent of China's total demand for the year, according to financial new website jrj.com. Rare earths imports from Myanmar accounted for one-third of China's total consumption last year, the report said.

The news was cheered by domestic rare-earth companies, whose stock prices have surged. Companies have also gained from rising government support for the strategic industry amid a trade and technology tussle with the US.

After top leaders called for an upgrade in China's rare-earths industry, central and local government officials moved swiftly to introduce measures to boost innovation and research and development in the industry.

The moves also came as Chinese officials suggested that they might restrict exports of Chinese rare earths to the US, in retaliation for the latter's ill intentions to contain China's economic and technological development. 

China is the world's largest rare earths producer, accounting for more than 85 percent of the world's total output. US high-technology companies rely on Chinese rare earths to make products such as semiconductors and fighter jets.