Concept of Rare Earth Elements

Rare Earth Elements, commonly referred to as Rare Earths, are a group of 17 metallic elements that are scarcely found on Earth. They are primarily mined in countries like Brazil and China.

In terms of national reserves, China has the largest deposit of these elements, followed by Vietnam, Brazil, and India.

These rare earths are primarily used in the production of permanent magnets. A permanent magnet is a material that remains magnetized even after an external magnetic field is removed.

This means that it retains its magnetism even without an external magnetic field, making it highly efficient.

Materials used for permanent magnets include ferrite and alnico, but neodymium holds the largest market share, accounting for 59.2% based on value.

Development of Permanent Magnets

The permanent magnet was simultaneously invented in 1983 by Masato Sagawa of Sumitomo Special Metals and by the American company GM.

Both companies used a combination of neodymium, iron, and boron in their magnets. However, their manufacturing methods differed slightly.

After a legal battle spanning two years starting from 1987, the two companies agreed on a Cross-License and are currently collaborating in research.

Types of Neodymium Permanent Magnets

The manufacturing methods categorize the magnets into sintered, bonded, and hot-deformed.

Sintered magnets are produced by grinding the material into powder and then processing it. They boast the best performance but come with the disadvantages of a complex production method and high production costs. They are mainly used in cars and wind turbines.

The bonded method involves mixing the powder with epoxy resin and then injection molding. It’s a simpler production method, but the magnets produced are weaker in terms of magnetic properties and heat resistance. They are primarily used in small motors.

Hot-deformed magnets are produced through a hot compression and deformation process. They have excellent high-temperature properties and corrosion resistance. However, mass production is challenging.

Outlook on Rare Earth Elements

Rare earth permanent magnets have a wide range of applications. They are used in a vast array of products, from consumer electronics like speakers, microphones, and air conditioners to advanced industries like electric cars, robots, and defense.

In the U.S., the Department of Defense is so concerned about securing these rare earth elements that they’ve taken on the responsibility themselves, underscoring their significance in enhancing national defense capabilities.

Demand Forecast for Rare Earth Elements: Electric Cars and Wind Turbines

Electric vehicles are a global trend. For these vehicles, the battery is vital. The emphasis on the battery is to create vehicles that are more efficient and have longer driving ranges.

However, by enhancing the efficiency of the car’s motor through permanent magnets, even more efficient electric vehicles can be produced.

During the production of electric vehicles, 1-2kg of permanent magnets are used. Tesla has used permanent magnets in some of its models. Mercedes Benz is also considering procuring permanent magnets for its vehicles.

Currently, offshore wind turbines apply about 14.2%, and electric cars about 6.1%, of the total use of these magnets. However, by 2050, it’s projected that offshore wind turbines will account for 36.3% and electric cars for 35.3% of the total application.

Outlook on Rare Earth Supply:

China is the leading country in the rare earth supply chain. It accounts for 58% of rare earth production and 92% of magnet production.

China continues to regulate rare earth exports, focusing on establishing a policy foundation for its independent development.

Major countries, including the US and the EU, are considering regulations based on national security and sustainability.

Under these circumstances, the US has recently visited Vietnam, initiating an aggressive supply war over rare earths.

U.S. Embraces Vietnam: Accelerating the “Decoupling from China” for Rare Earths

Various American companies are making investments in Vietnam, and the US is securing a priority in Vietnamese rare earths. The level of investment by the US, a nation known for its strong domestic priorities, signifies the importance of rare earths.

Rare Earth Trends

Trends in the United States’ Rare Earths

As of 2022, the US has seen an increase of about 200% in its imports of permanent magnets compared to 2016.

The largest country of import is China, accounting for about 75%.

While the US does produce rare earth elements, it relies predominantly on overseas supply chains due to limited production capabilities.

High-quality rare earths are not produced in the US, leading to a high dependency on China.

Companies involved in establishing a rare earth supply chain within the US include:

MP Materials, Lynas, General Atomics, Energy Fuels, USA Rare Earth

Prominently, MP Materials is a company that receives funding from the Department of Defense. It has set a production goal of 20,000 tons of rare earth oxides annually.

Trends in China’s Rare Earths:

In 2021, China’s rare earth exports increased by 38% year-on-year to 48,198 tons, while in 2022, it decreased by 0.4% year-on-year to 48,728 tons.

• However, with the surge in rare earth prices, the export value increased to $1.06 billion (approximately 1 trillion won), nearly a 63% increase year-on-year.

China is not only the largest producer of rare earths but also the largest consumer in the world.

• China accounts for 57% of global rare earth consumption, with the majority being used in the permanent magnet sector.
• Permanent magnets are materials used in various fields, including electric vehicles, solar and wind power generation, consumer electronics, industrial motors, and robots.

On the 16th, it was announced that China Rare Earth Group (中国稀土集团, hereafter ‘Rare Earth Group’) signed a strategic agreement with China Mobile (China Mobile·中国移动), one of China’s three major telecom operators.

• Rare Earth Group is the world’s largest state-owned rare earth company, formed by merging Chinese state enterprises and research institutions. The company revealed that through this agreement, they will promote the digital transformation of the rare earth industry.

◦ Industry insiders expect that the collaboration between Rare Earth Group, which possesses extensive know-how in mining, refining, and processing of rare earths, and China Mobile, known for its robust technological capabilities and competitive network, will further advance China’s rare earth industry in terms of precision, intelligence, and technological strength.

China’s Rare Earth Companies:

A representative company related to China’s rare earth is China Northern Rare Earth Gp H-T. It’s directly managed/supervised by the State-owned Assets Supervision and Administration Commission. The company was strategically established by merging existing rare earth-producing companies to strengthen China’s dominance in the rare earth market. It is currently a key company associated with rare earth risks.

Rare Earth Trends in South Korea

South Korea does not produce any rare earth elements. They are mostly imported from abroad in the form of intermediates. South Korea has been making efforts to establish a supply chain somewhat later than other countries.

In 2022, South Korea’s permanent magnet import value exceeded $640 million. Around 87% of it is dependent on imports from China.

The increase in South Korea’s import value of permanent magnets is largely related to electric vehicle production. Both Hyundai and Kia Motors apply motors using permanent magnets, hence there is a continuous demand for these magnets.

Moreover, since South Korea’s secondary battery industry is relatively developed, due to the synergistic effect between secondary batteries and permanent magnets, they collaborate with countries like Australia.

The most representative Australian company is ASM. This company has invested in KSM Metals in Korea. It is anticipated that the collaboration between Australian materials and Korean technology will result in a synergistic effect.

In addition, companies like Union Material, Novatec, and Setopia are promoting rare earth-related businesses in South Korea.

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