The price of rare earth oxides and metals declined significantly in the 1990s and early 2000s, which was primarily due to the competition between Chinese companies. But since late 2005, neodymium prices have increased significantly. This is primarily due to the strong demand worldwide, mining quotas, active enforcement of environmental policies and shutting down offenders in China. The production of rare earth metals elsewhere has become more attractive due to price hikes, although China may still remain as the lowest cost producer in the near future. Global demand of rare earth oxide is estimated at about 100,000 - 120,000 metric tons in 2007, and forecasted to grow at about 9% per year through 2012. Supply shortfalls are predicted in the near future as domestic consumption in China could exceed supply in 10 years. [Would be nice to find some forecasts on neodymium specifically, besides Jack Lifton's on the Gerson Lehrman Group website and quoted in the diary.]

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The permanent magnet industry [in the USA] has been declining in recent years due to a number of reasons, including:  

(1) Low-cost magnets from China squeezed the profitability of U.S producers;
(2) Many customers for permanent magnets have relocated to Asia. (It makes sense for the magnet producers to be closer to their customers);
(3) The majority of rare earth metals come from China; Chinese magnet producers are close to the inexpensive raw materials as well as low-cost labor force and engineering talent;
(4) The quality of permanent magnets made in China has improved significantly;
(5) Industry consolidation.

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4. Value-Added Business in the Permanent
Magnet Industry

Value-added magnet business, such as the production of assemblies and or subsystems, is doing well in the United States. Some magnet producers and fabricators offer design services using finite element analysis, such as Dexter, Arnold and EEC. This trend will continue because offshore producers may not be able to provide this service effectively.

5. Permanent Magnet Applications

Some major magnet applications are related to more efficient motors and generators.  Therefore we could not start the discussion of future permanent magnet markets without mentioning the oil market.

Figure 3. NYME crude oil futures in the last 12 months [2]

The crude oil futures went up significantly in the last 12 months and are currently above $140 per barrel. Figure 3 shows crude oil futures on the New York Mercantile Exchange (NYMEX) in the last 12 months.  Consumers felt the pinch at the gas pumps. Renewable energy, therefore, has become a hot topic and a profitable business. Wind power, hydropower, ocean wave and solar power are receiving more attention. These are also called clean energy because there is almost no environmental pollution.

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Wind Generators

Some wind power generators use permanent magnets. The rapid development of wind generation capacity is also related to current high oil prices and the green energy movement. Figure 5 shows a 21st century wind farm in the California Central Valley and offshore wind turbines near Copenhagen [4].

The wind power industry is in an era of substantial growth, both globally and in the United States. About 20,000 MW of wind power capacity was added in 2007 worldwide, the highest volume achieved in a single year. GE Wind was the dominant producer of wind turbines in the U.S. market in 2007. Other major players in this field include Vestas, Siemens, Gamesa, and Mitsubishi.

bringing the cumulative total to 16,904 MW, according to a report from U.S. Department of Energy [5]. Figure 6 shows the annual capacity and cumulative U.S. wind power capacity.

Figure 6. Annual capacity and cumulative capacity of U.S. wind power capacity

"Current Status of Permanent Magnet Industry in the United States" [PDF!]
M.H. Walmer, J.F. Liu and P.C. Dent

Original manuscript, Proceedings of 20th International Workshop on
RARE EARTH PERMANENT MAGNETS AND THEIR APPLICATIONS, Sept. 8-10, 2008, Crete, Greece