Here's some Yellow Peril from the Baotou National Rare-Earth Hi-Tech Industrual Development Zone website:
In 1992, Chinese President Deng Xiaoping pointed out, "There is oil in the Middle East; there is rare earth in China...." That same year, the State Council approved the establishment of the Baotou Rare Earth Hi-tech Industrial Development Zone. During his 1999 visit to Baotou, President Jiang Zemin wrote, "Improve the development and applications of rare earth, and change the resource advantage into economic superiority." Then President Jiang repeated the strategic importance of developing China's rare earth industry, which has caught worldwide attention. The reason why rare earth, a small industry with annual consumption of only 75,000 tons REO and a market value below US$100 million, has been given attention by Chinese leaders at all levels is due to its uses in modern hi-tech industries because of its special chemical and physical properties. As a matter of fact, rare earth has been listed in the category of strategic elements in many countries, such as the USA and Japan. [bold in original]
The reason why rare earth, a small industry with annual consumption of only 75,000 tons REO and a market value below US$100 million, has been given attention by Chinese leaders at all levels is due to its uses in modern hi-tech industries because of its special chemical and physical properties. As a matter of fact, rare earth has been listed in the category of strategic elements in many countries, such as the USA and Japan.
[bold in original]
But Deng Xiaoping was too modest, at least with regards to neodymium, for here is what the author of the Atlantic article Lisa Margonelli had to say about the Chinese supply of that mineral in a radio interview a couple of weeks ago:
What I think the big difference between neodymium and oil is that there are 160 kinds of traded crude oil on the market and they come from all over the world and you can always kind of swap one out for the other, but we've only got one source for neodymium at the moment.
Earlier in the interview, Margonelli explained:
Each hybrid vehicle requires one to two kilograms of neodymium. The problem is that right now, more than 97% of the world's output of neodymium comes from China [though she later says that the USA's reserves of neodymium are about half of China's]. And China has been cutting back its exports, partly because they want to develop their own permanent magnet industry, and because they're thinking of this as kind of a long-term strategic thing. So they have been cutting back their exports. There was a bit of a panic in the summer of 2007 when neodymium prices went up to about $60 a kilogram. And everyone freaked out and started realizing, "Wow, all this stuff is coming from China. What are we going to do if either China doesn't increase the amount that it's producing or they start limiting who they sell them to?"
So they have been cutting back their exports. There was a bit of a panic in the summer of 2007 when neodymium prices went up to about $60 a kilogram. And everyone freaked out and started realizing, "Wow, all this stuff is coming from China. What are we going to do if either China doesn't increase the amount that it's producing or they start limiting who they sell them to?"
Margonelli seems to have exaggerated a bit with that $60/kg figure, but there was indeed a price spike in the summer of 2007:
Why the price of neodymium dropped just as quickly as it went up in the summer of 2007, I have no idea. Did the Chinese restore their exports to previous levels again?
Anyway, there is some good news: U.S. mining company MolyCorp Minerals, LLC has recently started producing neodymium-praseodymium at its Mountain Pass, California mine. According to Jack Lifton on the Gerson Lehrman Group site:
It is not clear whether or not Mountain Pass will be allowed by California regulators to reopen its mining operation due to environmentalist resistance. But the rare earth ore processing plant is in operation, although at a low level, and even now produces neodymium-praseodymium materials for magnet use.
What's more, MolyCorp has Goldman Sachs backing them financially (at least for now) and is trying to make neodymium a security issue:
MolyCorp was purchased and privatized from Chevron Mining in 2008 by a group of investors with specialized knowledge of rare earth mining, which was backed by Goldman Sachs. <...> There is a movement in Washington to reconsider the mining of strategic and critical metals within the US as a security issue for the armed services. This may be the hook that MolyCorp is using to get Goldman Sachs to finance Mountain Pass, and the vertical integration of MolyCorp through the acquisition of GWMG's magnet alloys production capabilities may be key to this strategy.
<...>
There is a movement in Washington to reconsider the mining of strategic and critical metals within the US as a security issue for the armed services. This may be the hook that MolyCorp is using to get Goldman Sachs to finance Mountain Pass, and the vertical integration of MolyCorp through the acquisition of GWMG's magnet alloys production capabilities may be key to this strategy.
So with financial interests on Wall Street and national security interests in Washington behind it, the push to produce "Whole Foods, free-range, U.S. produced neodymium" on a larger scale in the USA may make some headway. Truth unfolds in time through a communal process.
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.] <...> 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. <...> 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. <...> 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
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.
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.
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
