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Chinese Rare-Earth Magnet Producer to Expand as EV Demand Booms

Bloomberg News
(Bloomberg) -- Japan’s magnet makers may be the big beneficiaries from any Chinese curbs on rare earths exports, according to one of the top producers.That’s because producers have been able to reduce the amount of rare earths they use after a 2010 decision by China to cut export quotas and curtail shipments to Japan spurred efforts to develop substitutes, according to Toshiyuki Inouchi, an executive of Tokyo-based Hitachi Metals Ltd. Attention has returned to the broad group of 17 elements this year after Beijing signaled its intent to restrict exports as part of the ongoing trade war with the U.S.Permanent rare-earth magnets are the biggest single market for the minerals and Japanese and Chinese producers want to tap into an expected surge in demand for tiny magnets and motors as electric vehicle use expands. Hitachi estimates that the need for the magnets it manufactures will expand at an annual pace of about 10% to 15%, led by growth in the auto sector, said Inouchi, senior manager of the planning department in the advanced components and metals division.China dominates global supply, accounting for 70% of rare earths production and more than 90% of permanent rare-earth magnets, and has indicated it has a plan to restrict exports to the U.S. if needed. While it’s unclear whether and how the government would implement curbs, Hitachi Metals said it’s already developing heavy rare-earth free magnets and sourcing raw materials from outside China. If exports were restricted to all countries, not just the U.S., there would be a greater impact on the heavy elements sub-group.“If heavy rare earths were not coming out from China for years to come, the impact would spread globally, but we wouldn’t see any problem if a suspension lasts only for several months,” Shigekazu Suwabe, general manager of Hitachi Metals’ magnetic materials business unit, said in the same interview last week. Heavy elements are harder to source outside of China, while light rare earths would be easier to procure, he said, with the company buying from Lynas Corp.Read more: Why rare earths could give China a trade war cudgelChina previously restricted rare earths exports in 2010 by slashing quotas and implementing a de facto ban on shipments to Japan amid a row over disputed islands. Hitachi Metals has cut its use of dysprosium, typically added to the neodymium magnets to make them heat tolerant and more efficient, by half since then and also produces magnets that are either free of heavy rare earths or contain only a very small amount.Chinese producers have become more competitive in the magnet market and have benefited from the country’s policies to promote EVs, according to Suwabe. The revival of rare-earth fears could be a chance for Hitachi Metals to boost sales to auto customers, he said.To contact the reporter on this story: Masumi Suga in Tokyo at msuga@bloomberg.netTo contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Keith GosmanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

(Bloomberg) -- Industries around the world producing a host of electrical appliances will increasingly be forced to compete for rare-earth magnets with China’s burgeoning market for new energy vehicles, according to one Beijing-based magnet producer.

Jingci Material Science Co. is expanding its production capacity of neodymium-iron-boron -- NdFeB for short -- magnet material to 8,000 tons by the end of the year, from about 6,500 tons currently, sales director Qiu Yi said on the sidelines of an industry conference in Shanghai last week. The eventual goal is to raise capacity to 12,000 tons, he said, without giving a time-frame.

The importance of rare earths, ubiquitous across a range of applications from consumer goods to military gear, has been thrust into the spotlight in recent weeks as China mulls whether to use its position as the world’s dominant supplier as a counter in its trade war with Washington. The minerals biggest usage is in permanent magnets, which include the NdFeB variety, and which are found in everything from phones to computers to cars.

China, also the largest permanent magnet maker, produced about 160,000 tons of NdFeB last year, from total capacity of around 300,000 tons, Qiu said. China accounts for about 80% of the $10 billion-plus global market for NdFeB magnets, according to financial results published in April by Ningbo Yunsheng Co., another producer.

The nation is also home to the world’s biggest market for electric vehicles, and demand for NdFeB magnets from EVs could rise to 12,250 tons in 2022 and then 34,300 tons in 2025, from 5,600 tons last year, said Qiu, citing company estimates.

NdFeB magnets contain around 30% neodymium and praseodymium, or NdPr, two of the 17 rare earth elements that are actually quite abundant in the earth’s crust although concentrations conducive to mining are are less common than other ores.

To contact Bloomberg News staff for this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net

To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Jason Rogers, Keith Gosman

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.