In a recent television broadcast a story is told about the importance of rare earths and magnets. Molycorp and Magnequench are the lead businesses in the story. Problem is, most of the facts of the story were incorrect.
There are numerous articles on the web that report the facts as they took place. One in particular that is well documented is from the Heritage Foundation and can be read at;
China, like any shrewd investor, has made investments in strategic materials for decades whenever the opportunity presented itself. Carbide ceramics used in metal cutting tools were almost entirely supplied by China. The market for carbide tools is $4.7 billion in the the US alone. Carbide prices were being quoted on a month-by-month basis as China was restricting the availability. Great for profits, not so great for users.
Magnet pricing in the industrial servomotor market went through the exact same thing. Every motor supplier using Neodymium was quoting magnet surcharges and pricing fluctuation monthly as China squeezed the world market in magnets.
The discovery and patents for neodymium magnets were owned by General Motors and Sumitomo Heavy Metals. Both companies independently discovered the material and process technology. In the US, GM invested in the magnet material hoping to improve starter motors and leverage other permanent magnet applications that would benefit from greater power density. In spite of the revenue and opportunity that Magnequench created back in the 1990’s, GM’s poor financial performance led to selling many of it’s smaller business units.
High energy magnetic like neodymium and samarium-cobalt are used in missile fin actuators. There are dozens of other military applications for magnets. These applications make magnets a strategic material for the Defense Department.
The Department of State allowed the purchase of Magnequench by the Canadian holding company MQI which was a front for 2 Chinese investors. China used the acquisition to learn how to manufacture high energy magnets in China. They already has one of the largest mines in the world. China proceeded to shut down the Magnequench plant in Indiana making the US dependent on Chinese magnets.
The Department of Defense advised the Department of State against the sale of Magnequench to China.
The EPA at one point shut down operations at Molycorp’s Mountain Pass facility. Molycorp has raised a tremendous amount of money over the last few years to make their facility in California compliant with all EPA requirements. The costs have impacted the company’s profitability.
I’m pretty sure that China doesn’t care about the environmental impact of the their rare earth mining and manufacturing operations. Combined with the low labor cost, they should be the world leader in high energy magnets.
Maybe good old Yankee Ingenuity and folks like the team at Molycorp will surprise the competition.