Industry Market Trends

Industry Getting Smart about Rare Earth Minerals

Aug 20, 2013

Chinese dominance of the rare earth minerals (REM) market is forcing manufacturers to seek alternatives to the substances. Of particular concern are rare earth magnets, which are used in the manufacture of products ranging from smartphones to electric motors.

Beginning in the 1970s, China lowered the price of REMs being mined in Mongolia to drive out competition from other suppliers. Today, the Chinese government commands 95 to 97 percent of the total global output of REMs.

When newer technologies that required these materials gained traction -- including solar and wind energy systems, hybrid and electric vehicles, high-efficiency lighting, military and aerospace technologies, and most recently, high-efficiency electric motors -- China was able to raise prices to astronomical levels. By 2011, prices for key REMs had risen by 700 percent.

The impact has been felt by many manufacturers, in particular those that make electric motors or incorporate them into their products.

"Electric motors utilize approximately 40 to 60 percent of all electricity produced worldwide every year -- a staggering amount," said Alex Chausovsky, manager of the Motors and Mechanical Powers Transmission Group of IHS, a provider of global market and economic information.

Electric motors for fans, pumps, and compressors account for about two-thirds of all motor applications, Chausovsky told IMT. They operate industrial machinery, run pumps in water power generation, and run fans in air conditioner compressors. By comparison, the second largest category of energy use is lighting, using about 20 percent of all global electricity.

"If you are able to increase the efficiency of these motors by even 5 percent, you stand to save tremendous amounts of energy," said Chausovsky. "As an alternative, there have been other technologies developed -- some new, some older -- to act as a replacement for these rare-earth-based magnets [used in motors]."

Ferrite magnets, for example, which are much cheaper and more common, are typically used as a substitute for traditional neo-magnets that use neodymium-iron-boron (NdFeB).

"The automotive industry is one of the more focused industries trying to reduce reliance on rare earths," explained Jim Sims, vice president of corporate communications for Molycorp, a world leader in processing rare earth materials.

"Modern automobiles can have 50 or more motors -- motors for power steering, seat movement, transmission fluid, brakes, etc. Many of them have permanent magnet motors that are much more efficient and powerful than an induction motor," said Sims.

At the heart of the matter is dysprosium, an extremely rare and expensive mineral that allows these lightweight magnet motors to operate at high temperatures and performance.

Manufacturers are trying to address and minimize the supply chain risk of dysprosium on multiple fronts, said Sims. Getting more production out of the ground, as the U.S. and Australia are starting to do, is one key.

Of most importance are suppliers, engineers, and users who have jointly focused on ways to reduce and minimize the amount of dysprosium manufacturers have to use in high-performance magnets.

"If you can produce a magnet and a motor that allows you to use only 2 percent dysprosium instead of 8 percent dysprosium, that's a big deal," said Sims. "If you can find a magnet that uses 1 percent or zero dysprosium, that's a huge deal."

Molycorp research and development efforts are finding ways to reduce the amount dysprosium that goes into the powder that gets pressed into powerful high-end sintered neo-magnets. On the lower end, Molycorp is improving the performance capabilities of bonded neo-magnets that have zero dysprosium. "In some applications we are able to make bonded neo-magnets that come very close or can meet the specifications of sintered neo-magnets," said Sims.

While the primary characteristic of some REMs is magnetism, others like europium, terbium, and yttrium generally have light-emitting qualities. Sims cites two trends in reducing REMs in lighting. The first attempts to recycle and recover the phosphor powder in lightbulbs. The second is a shift to LED (light-emitting diode) lights that still use REMs but at a greatly reduced amount.

The petroleum industry is trying to reduce reliance on the rare earth lanthanum, used to make fluid catalytic cracking (FCC) units more efficient when refining gasoline. "But it is all about the price point," said Sims. Substitutes for lanthanum are not yet as efficient for FCCs and "companies have to balance price and supply risk with efficiency gain," he added.

A REM glass-polishing agent, cerium, is used in the manufacture of eyeglasses and is relatively abundant. But the price rose in response to Chinese supply restrictions, and consequently substitutes have been sought by eyeglass makers.

In some cases it is not possible to get the same performance achieved with REMs. Rare-earth properties emanate from the molecular level, and substitutions are typically not done by element but by engineering.  In most market sectors, the focus is on minimization or greater efficiency of rare-earth use.