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Permanent Magnets: the Demand for Rare Earths
Suzanne Shaw
Roskill Information Services
and
Steve Constantinides Arnold Magnetic Technologies
8th International Rare Earths Conference
November 2012
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The statements in this presentation represent the considered views of Roskill Information Services Ltd. and Arnold Magnetic Technologies (the “Presenters”). It includes certain statements that may be deemed “forward-looking statements”. All statements in this presentation, other than statements of historical facts, that address future market developments, government actions and events, are forward-looking statements. Although the Presenters believe the outcomes expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include changes in general economic, market or business conditions.
While the Presenters have made every reasonable effort to ensure the veracity of the information presented we cannot expressly guarantee the accuracy and reliability of the estimates, forecasts and conclusions contained herein. Accordingly, the statements in the presentation should be used for general guidance only.
Disclaimer
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Overview of the rare earths market
Permanent magnets – current market trends
Future demand for permanent magnets
Consumption of rare earths in permanent magnets
Summary
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Overview of the
rare earths market
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Roskill Source: Roskill estimates
• World ‘official’ production of REO
~110,000t in 2012, 85-90% in
China
• World demand ~120,000t in 2012,
65-70% in China
World: Demand for rare earths
by end-use, 2012 (%)
21%
20%
18%
13%
8%
7%
6% 7% Magnets
Metallurgy
Catalysts
Polishing
Glass
Phosphors
Ceramics
Other
120,000t
Global demand for rare earths
by end-use in 2012
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Demand for rare earths by element in 2012
Source: Bloomberg
La
Nd
Y
Pr
Source: Roskill estimates
Pr
magnets, phosphors,
ceramics, metallurgy,
polishing, other
Y
phosphors, ceramics,
other
Nd
magnets, ceramics,
metallurgy, glass, catalysts,
phosphors, other
Ce
polishing, metallurgy,
catalysts, glass, phosphors,
ceramics, other
La
metallurgy, catalysts, glass,
phosphors, ceramics,
polishing, other
Other HREEs
magnets, lasers, phosphors,
glass, metallurgy, other Ce
40%
La26%
Nd18%
Y7%
Pr5%
Other HREEs
3%
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Roskill Source: Roskill estimates
China continues to dominate global demand
World: Total demand for rare earths in China and
ROW, 2000 to 2017 (%)
• China is leading demand - 70%
in 2012
• Demand is increasing from
higher value applications
• Chinese demand to exceed 70%
by 2019-20
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
China ROW
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Permanent magnets – current
market trends
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What are rare earth magnets
•NdFeB (neodymium iron boron, aka ‘neo’ magnets)
– Powder for bonded magnets: compression, extruded, injection molded
– Sintered (powder metallurgy)
– Hot rolled (no longer made): modified composition; Seiko-Epson
– Die-upset / forged, fully dense: Magnequench MQ-3 process (original and modified); Daido Electronics
•SmCo
– Sintered (powder metallurgy)
•SmFeN
– Powder metallurgy process resulting in a fine powder suitable for bonded magnets
– Unstable above ~450
C – no known method for achieving a fully dense magnet
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Types of permanent magnet
Source: Arnold Magnetic Technologies
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Different magnets for different needs
Source: Arnold Magnetic Technologies
0
-275 -200 -125 -50 25 100 175 250 325 400 475 550
Temperature, ºC
SmCo
Alnico
Neo
Ferrite
Usable Temperature Range
for Common Permanent Magnets
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Roskill Source: International trade statistics
Over the next 8 years demand for NdFeB magnets is
forecast to grow by around 9%pa – accelerated growth
after 2016
World: Permanent magnet production and value by type, 2005 to 2020
Source: Benecki, Clagett & Trout, Permanent Magnets 2010-2020
0
2,000
4,000
6,000
8,000
10,000
12,000
0
200
400
600
800
1,000
1,200
1,400
Mag
net v
alu
e (U
S$M
)M
ag
net
pro
du
cti
on
(kt)
NdFeB production Other permanent magnet production
NdFeB value Other permanent magnet value
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Roskill Source: International trade statistics
China will maintain its position as the leading
supplier of NdFeB magnets
Source: Benecki, Clagett & Trout, Permanent Magnets 2010-2020
World: NdFeB magnet production by region, 2005 to 2020 (kt)
0
20
40
60
80
100
120
140
2005 2006 2007 2008 2009 2010f 2011f 2012f 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f
China Japan Europe Other regions (including USA)
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Applcations for RE permanent magnets
34.4%
13.6%
10.9%
7.2%
6.2%
5.6%
4.1%
3.4%
2.6%
12.0%
Motors & Generators
HDD, CD, DVD
Transportation
Energy Production and Storage
Transducers
Drives, Clutches, Braking
Relays, Sensors, Switches
Appliances
Wave Guides
All Other
Source: Arnold estimates
Rare Earth Magnets by Application, 2012 year-end forecast
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Future demand for
permanent magnets
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Roskill Source: Arnold estimates
• Important driver for permanent
magnet demand over the last 25
years
• Shipments of HDDs alone were
an estimated 660 million units in
2011 (~9,000t NdFeB)
• Future growth at lower rate
reliant on such issues as
Replacement in mature
markets
Expansion of cloud computing
Long-term substitution with
new technologies such as SSD
(solid state drives).
Traditional markets: Consumer electronics
Neo Magnets in HDDs, CDs and DVDs
5,000
7,000
9,000
11,000
13,000
15,000
2008 2009 2010 2011 2012 2013 2014 2015
Ma
gn
ets
, to
ns
HDD sales from iSuppliCorp: www.isuppli.com
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Traditional markets: Standard automotive
• Engine components, battery components, moving car parts and other
integral systems – larger magnets, ferrite and NdFeB
• Interior applications – smaller magnets, typically NdFeB
• Around 40 magnets in motors and actuators, and 20 sensors in a
typical car
• Average of 250g NdFeB and 10-20g SmCo
Primarily in small motors and sensors
• Car and light vehicle production
80M units 2011 ~ 20,100t NdFeB
Forecast 90-95M units by 2015, but increasing intensity of use
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Traditional markets: Electric bicycles
• Large and growing market, mainly in Asia
• >16M produced in China in 2008 and >30M in
2011
• Production increasing but so is legislation to
discourage use
Banned in South China cities of Guangzhou,
Dongguan and Shenzhen
Vehicles of 20 kg or more and a top speed of
30 km/h will require a motorcycle license to
operate
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Will future growth come from wind turbines?
Source: Global Wind Energy Council
• Global growth in
wind turbine
capacity of 27%py
2000 to 2011
• Global capacity
could reach
450GW by 2020,
led by growth in
China
Global growth in wind turbine capacity, 1996 to 2011 (MW)
0
50,000
100,000
150,000
200,000
250,000
300,000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Annual Cumulative
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Growth in wind energy dominated by China
Source: Global Wind Energy Council
Top 10 new installed capacity,
Jan-Dec 2011 (%)
Top 10 cumulative capacity,
Dec 2011 (%)
China26%
USA20%
Germany12%
Spain9%
India7%
France3%
Italy3%
UK3%
Canada2%
Portugal2%
Others13%
China44%
USA16%
India7%
Germany5%
UK3%
Canada3%
Spain3%
Italy2%
France2%
Sweden2%
Others13%
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Wind turbine generator type and location
Source: Arnold Magnetic Technologies
Generator Generator Output in MegaWatts (MW)
rpm <1 >10
Generator Design (approx.)
Induction
(no Permanent Magnets)1800
Half Speed
(200 kg magnets/MW)800
Direct Drive
(600 kg magnets/MW)12
Superconducting
(no Permanent Magnets)??
Land-based
older technology
Land or offshore
hybrid drive, simpler gearbox
Mostly offshore
Land or offshore
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Source: Bloomberg
Direct and hybrid drive wind power turbines
containing NdFeB
• Very little of the current installed capacity contains rare earths
Small and early commercial turbine designs used induction generators
Some small turbines converted to permanent magnets to improve efficiency
Generation-4 wind power generators designed to use permanent magnets for
commercial power production
• Only new design, Generation-4, large-size direct drive or hybrid (half-speed)
turbines rely on large quantities of NdFeB magnets
• Direct drives are favored for large offshore turbines.
These turbines have a higher production cost due to recent magnet prices but
are more efficient and reliable
• Other sources of renewable energy may also utilise permanent magnet
generators
Examples are tidal and wave power turbines
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Source: Bloomberg
Direct and hybrid drive wind power turbines
containing NdFeB
• The European Joint Research Centre estimates that turbines containing
permanent magnet motors will account for 15% of global market share by 2020,
increasing to a possible 20% by 2030
• Optimistic forecasts predict direct drives to grow by 50-60% 2012-2013, led by
growth in China, followed by slower growth of 10-20% to 2015 once penetration
stabilises
• However, companies still offer traditional geared models for smaller turbines and
could easily revert to this technology if Nd prices rise to unsustainable levels
• What is the future for direct drives in China?
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Source: Bloomberg
Will future growth of come from EV/HEVs?
Source: www.hybridcars.com
US Sales of Hybrid, PHEV and EV
Cars, SUVs, Light Trucks
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012F
An
nu
al S
ale
s, U
nit
s
All Others
Mazda
Mercedes
Acura
Mitsubishi
Infiniti
Series11
BMW
VW & Porsche
Nissan
Kia
Ford & Mercury
Honda
Hyundai
Lexus
GM
Toyota
Actual sales in the US; 2012 through August annualised
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Source: Bloomberg
Will future growth come
from EVs/HEVs?
World: Forecast production of EVs/HEVs by type,
2010 to 2025 (000 units) • Production of EVs/HEVs
could reach 3.2-9.2
million by 2020
• In particular, HEV motor
systems often rely on
NdFeB magnets
• Toyota and others are
looking at induction
motors in EVs in case the
price of Nd becomes
unsustainable or supplies
are undependable
Source: Roskill estimates
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2011e 2012f 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f
HEV (NiMH) HEV (Li-ion) PHEV (Li-ion)
BEV (Li-ion) Pessimistic total Optimistic total
BYD e-Bus
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Consumption
of rare earths
in permanent magnets
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Roskill Source: International trade statistics
Over the last decade demand for Nd more than doubled
– driven by increased use of NdFeB magnets in
electronic equipment rather than “green” applications
Source: Roskill estimates
World: Demand for rare earth elements in
magnet manufacture, 2000 and 2010 (tREO)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2000 2010
Tb Gd Sm Dy Pr Nd
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Demand for rare earths in permanent magnets
estimated at 25,500t in 2012
Source: Bloomberg Source: Roskill and Arnold estimates
• 96% NdFeB, growth
driven by consumer
electronics, standard
automotive, air
conditioning, electric
bicycles
• 3% SmCo for specialist, high
temperature
applications
• 1% SmFeN for bonded magnets
• ~78% China
• ~22% Japan, other
Asia and Europe
Demand for rare earths in permanent magnets,
2000 to 2017 (kt)
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Factors affecting future consumption of
Nd, Pr and Dy in magnets
• Demand for REEs in magnets is forecast to grow at 6-8% to 2016 – much of this
growth will be related to continuing demand for use in consumer electronic
equipment (as well as electric bicycles in China and southeast Asia in general)
• Higher growth rates likely from 2016 if “green technology” applications
materialise
• Concerns about high prices and availability could limit the extent to which NdFeB
permanent magnet direct drive generators are adopted for wind turbines
• Similarly, auto manufacturers are seeking alternatives to permanent magnet
motors in electric vehicles
• Additional sources of rare earths are still to be established; adequate light rare
earths (Nd and Pr) are expected to be available
• The key ingredient is the heavy rare earth, Dy (dysprosium), which is required for
neo magnets to perform at elevated temperatures - supplies of Dy are expected
to remain tight
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Factors affecting future consumption of
Nd, Pr and Dy in magnets
• Dy is seen as the limiting factor
• Research is underway in Japan and the USA to identify ways of reducing intensity of
use – already cut by half in some magnets
• Technologies in-play or under research include
• Diffusion of Dy into the neo magnet to reduce the total quantity required
• Induction and synchronous reluctance traction drive motors (no magnets)
• Research on nano-structured and exchange-coupled magnet materials with reduced
or no rare earth content
• Lower application temperature to reduce demand for Dy
• Superconducting generators for wind power
• Recycling (or re-use) is a major thrust area
• Hitachi, Showa Denko and Mitsubishi Materials are all researching ways of recycling
REEs from discarded hard disc drives and other appliances
• A variety of organisations are seeking to increase recycling such as the Center for
Resource, Recovery and Recycling (CR3, www.wpi.edu/academics/Research/CR3/)
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Future consumption of NdFeB
• Consumption of NdFeB
magnets constrained by
lack of availability of
dysprosium
• Between 2010 and 2015:
influence of Dy-diffusion
technique and device
temperature control will
permit modest growth
• After 2015: minor additional
sources of dysprosium allow
the market to expand slowly
Source: Arnold Magnetic Technologies
0
25,000
50,000
75,000
100,000
125,000
150,000
2005 2010 2015 2020
To
ns
, R
E M
ag
ne
ts
Without Dy constraint
With limited Dy availability
Chart based on existing technology regarding use of Neo at elevated temperatures and upon max use requirements of applications
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Meeting the demands of the market
• In 2012 there is a discontinuity between the natural occurrence of REEs and the
ratio in which they are consumed
• The likely shortages of heavy rare earths (and possibly neodymium) will also
occur in China – how will this affect Chinese government policies – could it lead
to more restrictions on supply to the ROW?
• Supply of neodymium should ease from 2014/15 onward permitting expanded
Neo magnet use in electronics and other lower temperature applications
• It is unlikely that there will be any significant supply of HREEs from the ROW
before 2016/17 – companies dependent on a secure supply of dysprosium,
terbium and europium rely on the developing dynamics of the REE industry in
the south of China
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