Eamon Keane's  Instablog

Eamon Keane
Send Message
Eamon Keane has an undergraduate degree in Mechanical Engineering and a master's degree in Energy Systems, graduating both with first class honours. He has received the Institute of Mechanical Engineers Best Student Certificate, a Veolia Environment research scholarship and two IBM PhD... More
My blog:
  • Neodymium Magnets Provide Key to Understanding Rare Earth Trends 7 comments
    Jun 23, 2009 6:58 PM

    Rare metals are "the lifeline of industry"
    Japanese Rare Metals Task Force

    For an excellent primer on rare earth (NYSE:RE) metals read this article. They are present in small quantities in almost every technological device from TVs to electric windows. However with the world turning to technology to ameliorate our energy crisis, the demand for REs is set to ramp up. Are there enough REs to go around?

    The current state of REs may be summarised by a couple of graphs (Source USGS):

    Despite having just 30% of RE reserves, China has a virtual monopoly on the production of REs. The reasons for this are that China's RE mines are relatively high grade and low cost, which led to a collapse in production in the US. To analyse the situation going forward I'm going to drill down into the use of Neodymium-Iron-Boron magnets (NdFeB).


    "The global market demands for rare earth resources can be satisfied if the demand for the NdFeB industry is satisfied"
    Prof. Feng Hong: CEO, China Rare Earth Office

    This is true because REs always occur together and thus if Neodymium is going to be extracted, the others will be also. NdFeB magnets are the fastest growing segment of the rare earths.

    The US government studied the supply of REs and published a criticality index:

    Tonnage of NdFeB magnets is growing at 16% per year:

    What this graph shows is that the majority of NdFeB magnets are now made in China (77% based on the above graph) and this share is growing. The three emerging big users of NdFeB magnets are electric bicycles, hybrid cars and wind turbines.

    Electric Bicycles

    There are 100 million electric bicycles (EBs) on the road in China today; they outnumber cars 4:1. Of the 23 million EBs sold worldwide last year, 21 million were sold in China. The following graph delineates this (Source):

    These EBs contain lightweight, compact, NdFeB magnets for their miniature motors. They use approximately 350grams of NdFeB per bicycle. The chemical formula is (Nd-2-Fe-14-B) so this yields 86g Nd/EB. In 2007, EBs accounted for 5800 tons NdFeB or 13% of the worldwide total. I don't have figures for the neodymium produced in 2008 but if it was the same as 2007, the share would have increased to 18%. The average growth rate for the past 8 years was 35%. If this continues then by 2014 Chinese demand would be 100 million/year or 35000 tons NdFeB.

    There does not appear to be an alternative to NdFeB in bicycles due to space and weight considerations. The price of NdFeB magnets are about $40/kg so the bicycle contains $14 of magnets and $1.70 of Nd @ current $20/kg.Nd. EBs retail @ $290 and neodymium represents 0.6% of that.

    Hybrid Cars

    Hybrid electric vehicles (HEVs), plug-in hybrids (PHEVs) and pure electric (EVs) all require an electric motor. At present the vast preponderance of HEVs, including the Prius, use a Permanent Magnet Brushless Direct Current (PMDC) motor. These contain NdFeB magnets and there is no alternative (you could argue Sm-11.2%-Co-53.3%-Fe-27.5% (wt%) but the high reliance on cobalt is an Achilles' heel). The best performance one is a sintered magnet of composition Nd-31%-Dy-4.5%-Co-2%-Fe-61.5%-B-1% (wt%). Dysprosium is critical in this application to give resistance to demagnetization at high temperatures as the magnet reaches service temperatures of 160C.

    A motor can be up to 100kW although 55kW is a reasonable figure. For a 55kW motor 0.65kg of Nd-Dy-Co-Fe-B is required which gives 200g Nd/Motor (3.6g/kW) and 30g Dy/Motor (0.55g/kW). A 25kW generator is typically required to recoup braking energy so for analysis purposes a hybrid vehicle contains 288g Nd and 44g Dy. At $20/kg a car contains $5.76 worth of Nd and at $110/kg Dy a car contains $4.84 worth of Dy. At $10.60 worth of REs per car and a selling price of, say, $20,000, REs represent 0.05% of sticker price.

    If you accept John Petersen's analysis that binding targets on fuel standards imply an impending widespread adoption of hybrid technology then it is clear use of motors is set to take off. The current use of hybrids is very small (1m Priuses sold to date). If, for example, half of the EU's 15million new cars were hybrids in 2012; 2160 tons Nd (8802 tons NdFeB) and 330 tons Dy (390 tons Dysprosium oxide). Thus 20% extra Neodymium would have to be produced and 25% more Dysprosium (based on 2005 prodution of 1400 tons).

    Dysprosium is especially rare and Dysprosium reserves are almost entirely located in China. Japan is painfully aware of this fact and is scouring the globe looking for Dy deposits while also trying to develop magnets without Dy.

    This seems like a good point to stop. There is an alternative to PMDC motors - AC induction motors - which I'll discuss in a follow-up if there's any interest. I'll furthermore analyse the use of NdFeB in wind turbines.

    RE miners and investors can judge the direction of the industry if they understand the dynamics of NdFeB. My interim observation is that magnets represent a very small proportion of the sticker price of EBs and cars in particular. This would indicate that they are capable of absorbing a higher Neodymium price and manufacturers would be prepared to accept this for diversity and security of supply. This may make production of REs in the US and elsewhere more economic.

    USGS: [1],[2]
    Jack Lifton: [1],[2], [3], [4], [5],[6],[7],[8],[9],[10],[11],[12]
    GWMG: [1], [2]
    Hard Assets Investor: [1],[2],[3]
    NdFeB: [1]

    Disclosure: I don't own any stocks and never have

Back To Eamon Keane's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (7)
Track new comments
  • Phaedrus
    , contributor
    Comment (1) | Send Message
    You need to also look at the Neodymium market for the defense industry. If there is a disruption in the supply, the defense industry will determine the supply market mnore than EV's or bicycles. In addition. Neos are being used in more white goods and other consumer applications and the price fluctuations are driving people away from that too.
    24 Jun 2009, 10:54 AM Reply Like
  • Jeff Andry
    , contributor
    Comments (67) | Send Message
    Excellent article engstudent! I'm a rare earth investor myself and feel everyone should be as demand for these metals will only go up! Currently heavily invested in a speculative niobium company and have learned enough about REEs along the way to make me a huge fan of them and the companies who pursue them. Keep up the good work!
    27 Aug 2009, 07:22 PM Reply Like
  • Eamon Keane
    , contributor
    Comments (310) | Send Message
    Author’s reply » Thanks for you kind words, Red Stick. You're probably aware of Gareth Hatch, he blogs here and his website is excellent:


    Niobium, interesting. I see production is almost entirely from Brazil and Canada, are you looking further afield?
    28 Aug 2009, 05:13 AM Reply Like
  • Jeff Andry
    , contributor
    Comments (67) | Send Message
    Though production is almost entirely in Brazil and Canada, China is rapidly consuming more and more of the market for it. And they're spinning off deals with small Canadian miners left and right.


    I see your blog there. I was trying to find an email but was unsuccessful. If you want more details, shoot me a line. And I'm following you both here and there.




    P.S. I had not heard of Gareth. I am new to the field and my research is limited pretty much strictly to the goings on of the company I'm invested in. But that is an excellent REE blog. Thank you very much for the link.
    30 Aug 2009, 12:23 PM Reply Like
  • Eamon Keane
    , contributor
    Comments (310) | Send Message
    Author’s reply » Gareth's website is only a month old but he's pretty much the only magnet expert active in the online space. Another great source is the following magazine: www.magneticsmagazine.com/


    My email is eamon.keane1@ucdconnec... feel free to drop me a line.
    30 Aug 2009, 03:32 PM Reply Like
  • Eamon Keane
    , contributor
    Comments (310) | Send Message
    Author’s reply » @ucdconnect.ie
    30 Aug 2009, 03:32 PM Reply Like
  • alicesbgy
    , contributor
    Comment (1) | Send Message
    professional China magnet supplier with over 10 years export and magnet trade experience, supply neodymium magnets, ndfeb magnets.
    27 Jun 2014, 08:49 AM Reply Like
Full index of posts »
Latest Followers

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.