The acquisition model began to change. The price jumps have even affected domestic manufacturers, Hatch says. "What we see in the magnet industry in China is that there are definitely supply issues for the neodymium-based alloys. I've heard numerous people say, 'My magnet quote is usually good for 30 days before I place the order. Now the Chinese magnet guys say we have two days to place the order, and they need 50 percent of the money up front, and they will tell us what the final price will be on delivery.' It has just completely changed the whole dynamics of the industry."
Interestingly, though perhaps not surprisingly, the price issues are not tied to any sort of absolute shortage.
"The actual supply of these materials has not been in jeopardy," he said. "The irony is that the export levels have not been met. In other words, the legal official channels for exporting these materials have produced a lower volume of exports than the limit."
Nevertheless, prices continue to rise and have spurred the search for alternative technologies and suppliers. Hatch follows 381 rare earth projects, of which 20 involve proven resources or have been targeted for focused development. "The thing I get asked a lot is when is this going to sort itself out. There are a couple of projects [under way] in Australia and South Africa. In the next couple of years, we will have new sources for some of these materials, so we would expect the price to come down on the light rare earth elements.”
In particular, his projections indicate that Nd supply, including Chinese exports, will outstrip demand by 2013. Heavy REOs like Dy won't equalize until closer to 2016. Beginning in 2013, Australia will be the primary non-Chinese source of REOs, with Canada and the United States following a few years after.
To learn more, download Hatch’s free report here. It provides an enormous amount of detail on hold sources, new sources, and supply scenarios for all the relevant materials.
The good news is that the situation will improve. The bad news is that you have to design products now. These facts present a quandary. If your development timeline is three years, do you stick with rare earth magnets and assume prices will equalize by the time your product goes into volume production? Or do you turn to an alternative technology, trading price for size and performance?
Hatch's advice is not to make rash decisions. "Rare earth-based alloys and components do some really amazing things. I can understand folks wanting to design the pain of the price out, but it just depends on how far out you can go with either reducing size or tolerating cost increases. I say don’t throw the baby out with the bathwater."
One presently unexplored avenue for a new source of these rare elements would be recycling the devices that use them presently. How many discarded hard drives are there in landfills and other places? A huge advantage of recovering the elements from used product is the reduction in energy required, and the much lower level of pollution from pulling magnets out of hard drives.
I am sure that there are other products that contain the various rare elements that could also be the target of a cecycling effort. OF course, this really should have been started twenty years ago, which probably would have made the impact of this export reduction much smaller. But nobody would listen to me then. Perhaps now somebody will listen.
You hit the nail on the head! While some things such as advanced batteries will probably always require some rare materials, other things such as electric motors can be easily made without.
The fact that most hybrid cars are using rare earth magnets in their electric motors makes the motors a bit smaller and easier to acheive good performance - but good 'ol silicon iron + copper windings can certainly make a good motor too (induction motors, wound-field DC motors, etc.).
You hit the nail on the head! While some things such as advanced batteries will probably always require some rare materials, other things such as electric motors can be easily made without.
The fact that most hybrid cars are using rare earth magnets in their electric motors makes the motors a bit smaller and easier to acheive good performance - but good 'ol silicon iron + copper windings can certainly make a good motor too (induction motors, wound-field DC motors, etc.).
I'm not suggesting that other materials will replace the current materials but rather that technology will allow designs to accomplish the same functions using different technologies and/or just do things in a different way.
Short term, the backdrop is what we all know -- prices for REEs have shot sky, up more than an order of magnitude, in some cases. The story I was trying to track here was how the supply chain for REEs is likely to adjust -- and when. Magnet manufacturers, and motor manufacturers and users need to know because they've got to make design decisions now. Long term, you read correctly, the supply chain for REEs required for high-density, high-stability magnets is going to broaden, but for a product going to market next year, that's not going to be a big help. Manufacturers with short time horizons are either going to have to suck it up, make other tradeoffs to compensate, or seek alternatives. Not pleasant, but at least if you know, you can plan.
I never thought of the domestic market in China as being viable end users of their own magnetic material. I guess that does make sense. On a grand scale, the Chinese government might just be trying to look out for its own citizens.
I am experienced enough to realize there have been some remarkably stupid marketing ploys done in the past. Look at the Department of Energy heavy investment into permanent magnet electric machines, only to have this technology completely leveraged by China! So it is completely possible that a marketing and manufacturing dynamo like China made the classic marketing mistake of restricting their supply of minable rare earth material to open global competition. Or is there something else, “Perhaps the total global supply of practical minable rare earth materials from all known reserves (even those reopened) is insufficient to meet the demand if electric vehicles and wind turbines come to anticipated fruition.
One of the most interesting pieces of information in Hatch's report was a table that showed how much of the REE production from China is outside of official channels. In 2009, for example, roughly 36% of the REE tonnage shipped from China was in addition to official quotas. Black-market/graymarket producers operate on an entirely different cost basis than their competition.
As far as the Chinese government's motivation here, they do seem to be in general paying more attention to environmental protection. It can also be an effort to push commerce up the value-added chain, as RadioGuy suggested. There's another element that I've heard from analysts which is that China doesn't seem particularly concerned about outside suppliers positioning to take market share. They have an ever larger domestic market. The real subtext here may not be, "We're going to raise prices on you because you want to get as much profit as possible from your business" so much as "We're going to raise prices on you because we don'tReally need your business but if you insist on buying, we might as well make as much as we can."
As Jack mentioned, the issue is not one of labor but of environmental impact and the sheer difficulty of the processing. Extracting rare earth elements is not as easy as mining a vein or even extracting aluminum from bauxite, for example. Even within the same mine, REEs can be present in multiple different types of ores. The refining process requires a large number of chemical processes. Because thorium is often present in the rock, byproducts can be radioactive wastewater.
At the Mountain Pass mine in California, which is currently in the process of being reopened by Molycorp, Radioactivewastewater leaks in the late 1990s/early 2000s Brought the facility under scrutiny from the US EPA. With China offering REEs at such low prices, it simply wasn't cost effective to go through the cleanup process. Now, it is, and Molycorp just closed on $781 million in funding to do the cleanup. No word, as yet, on when they expect to start refurbishing, let alone producing product, but the project is at least in process.
By experimenting with the photovoltaic reaction in solar cells, researchers at MIT have made a breakthrough in energy efficiency that significantly pushes the boundaries of current commercial cells on the market.
We looked at a number of sources to determine this year's greenest cars, from KBB to automotive trade magazines to environmental organizations. These 14 cars emerged as being great at either stretching fuel or reducing carbon footprint.
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