The world supply of magnets is a hot topic. The Chinese bought General Motors’ Magnaquench company some years ago and have on their soil one of the largest developed mines of rare earth elements in the world. According to some analysts, China controls 95% of the supply of Neodymium magnets in the entire world.
Pretty weird. From a couple of different perspectives.
First of all, the original discovery of Neodymium Iron Boron as a high performance magnet material was paid for by the US military in 1982. General Motors developed a process that took liquid metal at high temperature, rapidly cooling the material in a spray cast process that resulted in a high quality magnetic material. So this should go in the history books as another breakthrough of American technology.
The original goal was to find a replacement for Samarium Cobalt which has always been a tricky material to deal with due to the wild fluctuations in the cost of Cobalt. The other implication here is the fact that the US military felt it was important to maintain stable supply of permanent magnets for missile guidance. So that makes the sale of Magnaquench to Archibald Cox, who then sold it to the Chinese, a very peculiar thing. If there was a strategic military interest in permanent magnets, it was not part of the consideration when we lost Magnaquench.
While GM was planning on reduced size and weight for its engine starters as the benefit of neodymium, the entire servomotor industry is standardized on neodymium magnets for its motors. At almost $1Bil a year in servomotors sold in the US each year, this is a pretty big deal.
The financial markets have been having a heyday with the situation. Speculation is rife that the Chinese government will continue to tighten supply of Neodymium magnets to the rest of the world. So in addition to the natural effect that pricing will rise due to short supply, speculators will drive prices even higher in the next couple of years as the situation worsens.
And the reason Neodymium magnets are in such demand is that they make great electric motors for industrial automation and for powering electric cars. So as the electric and hybrid electric manufacturing comes on line, tons of new supply will be needed. The current plan for wind power also requires large amounts of permanent magnets. So a lot of the “Green Revolution” will depend on the availability of these materials.
Having attended a couple of industry conferences on magnetics, I have become plugged in to the current state of the industry. There are huge deposits of ore in the US and Australia. Actually, neodymium is not particularly rare, which means it isn’t terribly expensive. But dysprosium, which is needed to stabilize the neodymium magnet against high temperature demagnetization, is quite a bit more rare and makes the permanent magnet a lot more expensive.
The rare earth elements all occur together in the ores, and when the mines are developed, they are graded carefully for the yield per ton of about a dozen different rare earth elements. So the really important fact is that the two largest rare earth mines in the world, in California and in Australia, will be extremely important in restoring the balance of supply in the near future.
And, in fact, the California mine is already well on its way to supplying the US’s needs. Because people in the industry, and American and international investors, were smart enough to see the future coming.