Recently, the White House of the United States stated that President Biden has decided not to restrict the import of neodymium magnets. 75% of the United States imports neodymium magnets from China. Today, the decision of the United States not to restrict the import of neodymium magnets shows that China’s position in the rare earth permanent magnet industry has brought strategic advantages.
However, does this mean China’s superior dominance in this industry?
The “Permanent Magnet King” can be seen everywhere
Speaking of neodymium magnets, many people may feel unfamiliar, but it is ubiquitous in life.
Neodymium magnet, also known as NdFeB alloy, is an alloy magnet of neodymium, iron, boron and other trace metal elements. It can maintain strong magnetism for a long time even when the external magnetic field is removed. It is called “permanent magnet king”.
Here we have to mention the magnetic induction coercive force. According to public information, this is the value of the reverse magnetic field strength required to reduce the magnetic induction intensity to zero when the magnet is reversely magnetized. The coercive force of NdFeB is generally above 10000Oe. High coercive force and strong anti-demagnetization ability, which is the reason for its permanent magnetism.
As the third-generation rare earth permanent magnet material, neodymium magnets are small in size, light in weight, high in energy density and strong in stability. From military equipment, wind turbines, to new energy vehicles, computer hard drives, and mobile phones that can be seen everywhere in daily life, they may contain neodymium magnets.
In particular, neodymium magnets are equivalent to the heart of new energy vehicles, and a new energy vehicle requires at least about 3 kilograms of permanent magnet materials. The permanent magnet motor made of it has superior performance in terms of motor weight, power loss, and high temperature resistance.
According to statistics, for a generator with the same power, a neodymium magnet generator is about half the weight of a normal generator. This is because, on the one hand, its size has been reduced, and on the other hand, its operating efficiency has been greatly improved. This can increase the cruising range of new energy vehicles.
According to the analysis and estimation of a securities company, from 2019 to 2025, the demand for magnets in electric vehicles is expected to increase by 600%, exceeding 35,000 tons.
Recently, Tesla has entered the new growth pole of the humanoid robot industry. Neodymium magnets are also indispensable in robotics. Statistics show that the demand for high-performance neodymium magnets from 10 million humanoid robots will reach 20,000-40,000 tons, which is equivalent to 20% to 40% of the total global demand for high-performance neodymium magnets in 2021.
Another securities company predicts that the demand for high-performance neodymium magnets in the global robotics industry will be 61,000 tons in 2025. At that time, the market size of high-performance neodymium magnets in the global robotics field alone will reach 30.5 billion yuan.
According to surveys, neodymium magnets may experience supply shortages and price increases in the next 5-10 years.
“Patch up” to mitigate supply chain vulnerabilities
The United States is currently the only sintered neodymium magnet manufacturer, and its relevant sources indicate that the United States accounts for about 20% of the global magnet demand of 20 billion US dollars. However, the source of neodymium magnets in the United States relies heavily on imports, of which 75% come from China, followed by Japan (9%), the Philippines (5%) and Germany (4%).
Neodymium magnets are equivalent to the heart of new energy vehicles, and a new energy vehicle requires at least about 3 kilograms of permanent magnet materials.
In fact, the United States was the first country to take the energy express train of rare earth magnets. In the 1960s, the United States first developed a rare earth magnet based on rare earth samarium and transition metal cobalt – samarium cobalt magnet SmCo5, which is also called the first generation permanent magnet. In the 1980s, two companies in the United States and Japan developed neodymium magnet compounds almost simultaneously.
Today, the United States has decided not to restrict imports of neodymium magnets, mainly from China. What happened?
Among neodymium magnets, there are also “three, six, nine, etc.” Compared with bonded and hot-pressed magnets, sintered (melted and compressed powder) neodymium magnets are well-deserved kings of permanent magnets in terms of permanent magnetism and production efficiency.
In the 1980s, the neodymium magnets developed in the United States adopted a bonding process that was cheaper but produced slightly less power, which was to mix the quick-quenched NdFeB magnetic powder with a binder, and through “compression molding” or “injection molding” Make a magnet.
However, the sintered neodymium magnets developed by Japanese companies are the hottest objects in the industry. Moreover, affected by multiple factors such as rare earth raw material prices and labor costs, US magnetic material companies have carried out industrial adjustments. Later, the company that developed neodymium magnets in the United States sold its magnet subsidiary to China, and closed all production lines in the United States in 2001. The international pattern of neodymium magnets has undergone major changes.
At least 36 U.S. weapons use rare earth magnets imported from China.
More than 20 years later, after nearly 300 days of investigation, the U.S. Department of Commerce found that the U.S. relies on imported neodymium magnets and suggested measures to increase domestic production. The US government also stated that it will support research on neodymium magnets to narrow supply chain vulnerabilities.
Today, the U.S. government has invested nearly 200 million U.S. dollars in three U.S. companies to improve the ability to process rare earth elements such as neodymium, thereby increasing the production of local neodymium magnets. Some senior U.S. officials even confidently stated that by 2026, the import penetration rate of neodymium magnets will drop significantly; compared with almost 100% relying on imports now, four years later, the domestic production of neodymium magnets in the United States is confident that it will meet 51 % of total demand.
The reason why the United States is so tense is that in addition to commercial reasons, it is reported that at least 36 types of weapons in the United States use rare earth magnets imported from China. This means that the U.S. stockpile of rare earth magnets has a direct impact on national defense.
The future is patent competition
In contrast, in China, China’s rare earth processing capacity is currently five times that of other regions in the world. At the same time, with the technological advancement of enterprises and the policy encouragement of transformation to high-end products in recent years, the output of high-performance neodymium magnets in China has increased rapidly, exceeding 46,000 in 2020. tons, accounting for nearly 70% of world production. China is firmly seated as the largest producer of high-performance neodymium magnets.
The United States wants to build a processing plant that matches China’s rare earth production capacity, which is not achievable in the short term. The chief executive of its only active rare earth mine said last year that China had taken over the magnet industry using rare earths: “Because the Western Hemisphere has had no rare earth supply chain for many years. China will continue to move downstream to compete for a greater share of the business.”
Looking back, China’s neodymium magnet industry has achieved leapfrog development: in 1996, China’s sintered neodymium magnet production accounted for 29% of the world’s total output; by 2005, this proportion rose to 78%; in 2016, the world’s leading magnet manufacturing Business Hitachi Metals announced that it has established a joint venture with Zhongke Sanhuan, a major magnet manufacturer in China. More and more rare earth permanent magnet manufacturers are turning their attention to China.
Some securities analysts believe that the rare earth permanent magnet industry is one of the industries that China plays an important role in international competition. In fact, in terms of high-performance products, countries are still facing fierce competition. In the future, there will be more patent competition and high-quality competition.
China’s rare earth magnet industry faces the risk of being blocked by Japan. Japan holds most of the most valuable permanent magnet patents and has established cross-licensing agreements globally. Without these licenses, on the one hand, other manufacturers may encounter difficulties in manufacturing cutting-edge magnets, and on the other hand, if downstream companies use neodymium magnets that have not been licensed, their products will be excluded in the United States, Japan, and Europe Countries and regions outside the coverage of these patents.
The patent threshold is the focus of China’s rare earth magnet industry to cross in the next step.