In some ways, the issue is one of logistics. Extracting these elements is not a simple process. Most non-Chinese players got priced out of the market and shut down operations years ago because magnets and motor manufacturers went for what was cheap. Launching or restarting facilities takes time. As Hatch pointed out, the heterogeneous supply chain will be reestablished, it's just not going to happen immediately.
You could essentially chalk up the issue to companies not thinking ahead, but we live in a time when planning horizons usually only reach the next set of financial releases. It becomes a situation of live by the sword, die by the sword. The perplexing part is that this is not a new paradigm – throughout the history of business and manufacturing, companies have made the mistake of depending on a single supplier or a single client, and then discovering (surprise!) that they no longer held any power in the relationship and were at the mercy of the entity that did.
This is a classic example of "communist" China behaving like a state capitalist entity, what we used to call a fascist state; the government acting to favor the country's largest industries.
US minerals companies used to own the market for rare earths, until China muscled in by lowering the prices so far that all the North American mine operators closed down. Then, once they had the market firmly in hand, they lowered the export quotas for the rare earth oxides, saying "if you want to use our REOs to make magnets, you must make the magnets here in China". The intent was to move up the value scale from exporting minerals to exporting magnets (and motors, and batteries and electric cars).
In the short run it is working. In the longer run, it will backfire, because there is now an awareness that you cannot allow China to be a monopoly supplier of anything, especially anything that has strategic or military applications.
Thanks for a timely piece. I design and about to produce 2kw wind generators and was surprised that Neo magnets had went up so much, 3x's the price last yr. Luckily I have designed it to take much lighter magnets so material cost doesn't go up that much.
In many places there is little need for REE's like EV's, Hybrids and those that now use them will have them designed out shortly. Since the replacement have variable fields mostly, they with have superior performance to PM fixed field motors.
Again in windgenerators, like EV's, did fine for 80-100 yrs without REE's. And like EV's with a variable field performance range will broaden, producing more power at both the lower and higher wind speeds.
Reading this article, and the comments about reopening mines, I cannot help but think of George C. Scott shouting "Mr. President, we must not allow a mineshaft gap!"
Why did this cutback by China cause such a problem? The article states clearly in the first paragraph there are other sources. Most readers realize single sourcing materials (while economical), can definitely lead to problems (point proven here). And yet, here we are.
This is very old news that started when China began limiting shipments of rare earth materials to Japan in September of 2010. The suggestion that alternatives to rare earth metals must be developed is naive. For example alternatives such as ferrite magnets existed prior to rare earth magnets and still do. However they are not as effective. The world does not grind to a halt if China limits materials. Many other areas of the globe contain these materials. The primary reason that China has so much influence as stated by other posters is that by having only cursory interest in safety or environmental regulation, they are able to mine these materials at very low cost.
@jmiller: Couldn't agree more. The possibility of artificial shortages and unregulated and poor quality in terms of mining practices is reason enough for manufacturers to seek out alternative technologies to rare earth elements and particularly China's supply.
Ok, so I may have misspelled the words and I'm not sure I remembered the phrase exactly as it goes. But never the less, this might just drive companies to look at alternative ways to produce the same components. Perhaps, cheaper more efficient ways using less ROEs. I think there are more than a few examples of products that worked themselves out of the marketplace by artificially creating a shortage.
It is agreed that more strigent regulation in the US may potentially shrink the US out of the RE magnet business. However, loosening our regulations is not reallyl an option. The mining conditions in some parts of China are basically not regulated. The big news on a recent vist to China was a deadly mine collapse in a northern province of China. The news came out that the owner was operating the mine illegally for about 15 years with no permits and therefore no inspections or safety measures. Of course someone running an illegal mine with low cost labor would be able to undercut any price. After squeezing everyone out of the market, China appears to be reducing the export amount to be able to fetch top dollar for their product.
@Ivan - In the US, the problem is more the with the regulations than an environmental impact. It is extremely difficult to start ANY new mining venture, simply because the word itself has a bad connotation regardless of the truth of limited impact.
On the larger issue of this article, it is really not that much of a surprise. With a finite quantity of RE available, China has both the mineral deposts and technology to go from mine to final product. This way they can flex their political / economic muscles by artifically creating a shortage.
Perhaps I am naive but it would seem this is an opportunity for some of the US suppliers of rare earth materials. It would be really good if the mining companies could restart the mining operations. If they could do it in a very environmentally safe way, using lots of new automation they might be able to become the low cost suppliers to US consumers of rare earths.
Obviously the US companies are not going to be able to compete with Chinese labor rates. They will have to compete based on higher quality, guaranteed supply schedules and by applying superior, cost effective automation and efficient production techniques.
As I recall after World War II, the US helped Japan and Germany rebuild their economies with new then modern plants. This put them in an excellent position to compete worldwide. The US needs a similar plan to help our manufacturers and suppliers compete using the best technologies and efficient automation.
The fact that we want to do this in an environmentally friendly way should make it a good selling point for everyone concerned with US jobs, productivity and the environmental activists. the US must adapt to compete with the rest of the world by playing to our strengths and minimizing our weaknesses.
Innovation, Information technology and automation coupled with long term investments in this countries resources will help us get out of the current economic doldrums.
Any additional suggestions? Am I wrong on any of the above?
Fifty-six-year-old Pasquale Russo has been doing metalwork for more than 30 years in a tiny southern Italy village. Many craftsmen like him brought with them fabrication skills when they came from the Old World to America.
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