Powertrain & Energy - July 25, 2012 - 22

The
row about
earths
rare
The resulting high-energy-density,
high-coercivity permanent magnets are
crucial components of the increasingly
powerful electric traction motors that
drive ecologically friendly electric vehicles
(EVs) and hybrids, as well as numerous
other green technologies such as wind
turbines. Even conventional cars use REE
magnets widely in motors, generators,
valves, and actuators, and other REE ingredients
in batteries, glass, mirrors, LCD
screens, and catalytic converters.
Rare earth price spike
“The prices started rising in 2007 when
people could see that demand was exceeding
supply for certain rare earths,”
recalled Steve Constantinides, Director of
Technology and longtime analyst of the
REE market at magnet manufacturer
Arnold Magnetic Technologies in
Rochester, NY.
As it became clear that this key commodity
was controlled by a single
source—China currently supplies as
much as 95% of REEs—that imposed
supply quotas on exports, fears of monopoly
conditions led to skyrocketing
rare earth prices. By mid-2011, neodymium
prices had risen tenfold from $25 to
$45 per kilogram in the years before
2010 to $450/kg. Dysprosium simultaneously
shot from $100 to $3400 per kg.
In the average high-performance magnet
of 2010, rare earths accounted for
80% of the cost of the material; today
that number is probably 95%.
“A tumultuous market and lots of media
hype led to an incredible run-up in
prices, which peaked about August
2011,” Constantinides said. “Companies
22 July 25, 2012
that needed magnets took to stockpiling, hoarding, doubleand
even triple-ordering.”
Chinese consolidation
During recent years, Constantinides explained, China’s government
bureaucracy had allowed its domestic REE market “to get
out of control.” Numerous small Chinese producers had successfully
competed aggressively to wrest market share from the
sole remaining U.S. REE supplier, Molycorp in Mountain Pass,
CA. But afterwards their continued intramural competition
eventually “eroded the price of rare earths to the point that
the market no longer behaved rationally.” In the meantime,
these “irresponsible” producers failed to protect the environment
and their workers from the toxic manufacturing
processes as they raced to feed the world’s unquenchable demand
for RE minerals.
Faced with “a disastrous feeding frenzy,” the Chinese gov-
ernment cited domestic resource depletion and environmental
degradation as reasons to place quotas on production levels
SAE Powertrain & Energy
GWMG’s LCM subsidiary in Birkenhead, U.K.,
carried out the first full-scale melt with a
refinery furnace in January.
Powertrain & Energy - July 25, 2012

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