Recently, the People's Republic of China banned the export of rare earth
magnet production technologies for national security interest.
Note, not the particular rare earth magnets themselves. The technologies that produce them.
There are 18 rare earth elements - the 15 lanthanides as well as yttrium,
scandium, and lutetium. They have wide technological and commercial uses.
Most of these use cases are small - the OEC values global rare-earth
metal compound trade volume in 2021 at about $2.7 billion - but they are
vital. Thus why we call them the "vitamins" of the tech economy.
But one use case in particular stands out to me over all the others: Magnets.
And China's tech export actions hint at their strategic importance.
In just a few years, China won a near-complete
monopoly on the production of these unexpectedly critical magnet materials.
And alternatives cannot economically compete.
In this video, let us take a look at the special economic power of the rare earth magnets.
## Why Magnets?
Magnetism is important because it helps facilitate
the conversion of electricity into mechanical energy and vice versa.
A permanent magnet is a magnet that is always creating its own magnetic field
without needing an additional external influence.
This is in contrast to an electromagnet,
which uses an external electric current to generate its magnetism.
Because of this, permanent magnet-based systems offer certain power and space
advantages. A 3 millimeter rare earth magnet can produce the same magnetic
power as passing 13 amps through a copper coil.
Furthermore, an electromagnetic coil can take up to five times more space than a
permanent magnet-based solution. Though this is dependent on the engineering.
Permanent magnet-based systems have their own shortcomings too. But their power
and space advantages make them widely used in electric motors, hard drives,
power hand tools, lasers, and various components for motors and actuation.
It is estimated that 20-35% of the world's rare earth production is
used for producing permanent magnets for motors.
For the most part, available rare earth supplies are more than sufficient to meet
current demand. The concern is about handling the coming demand growth from new energy
technologies like wind turbines, electric generators, electric vehicles, and so on.
For instance, the International Energy Agency estimates that demand
in the year 2040 will be 3-7 times higher than what it was in 2020.
## Permanent Magnet History
We have known about magnets for millennia,
but these powerful permanent magnets are recent inventions.
Up until the 20th century, the best permanent magnets we had available
for commercial use were high carbon steels, tungsten steels, and later cobalt steels.
Then in 1932, the Japanese scientist Tokushichi Mishima announced the
discovery of a class of iron-based magnet alloys known as Alnico magnets.
Called as such because they are mostly made from iron plus aluminum, nickel, and cobalt.
Alnico magnets were cheaper than cobalt steel,
and had coercivity many times better than the best cobalt magnet steels.
Coercivity measures how well a magnet can sustain its magnetism in the presence
of another magnetic field. Practically speaking, how hard it is to de-magnetize.
Alnico magnets were soon joined by the Ferrite magnets, which first hit the
market in the 1950s. They are not as powerful as the Alnico magnets,
but are way cheaper and have even higher coercivity.
These magnets dominated the permanent magnet market until the arrival of the
rare earth magnets. So now, it is time that we bring the rare earths into the story.
## Rare
As you might have heard, most of these "rare earth" materials are not actually that rare.
This has been long known. They shouldn't be called "rare earths" - more like "dispersed
and not-so-rare" earths. They are actually quite abundant.
In fact depending on your metric - I am using the estimates made by Kenneth
Barbalance on environmentalchemistry.com - Cerium is the 25th or 27th most common
element in the earth's crust at about 68 parts per million.
So literally speaking, cerium is more common than copper and three times more common than lead.
Neodymium is a little bit more rare but not too much so with about 38 parts per
million. This makes it more common than more frequently mentioned elements like uranium,
tin, arsenic, germanium, iodine, and even nitrogen.
The nitrogen bit is a bit of a trick though. There’s
way more nitrogen in the air than in the crust.
Anyway, these rare earth elements are around. The big problem is
economically extracting and refining those reserves into something usable.
## History of Refinement
The first known refinement of a rare earths element was performed
by the Swedish chemist Carl Gustav Mosander.
He took a mineral called cerite, dissolved it in acid, and then tried to separate out the various
elements. This method allowed him to discover lanthanum in 1839 - an impurity in cerium nitrate.
Over the decades, refinement technology improved. In 1875,
scientists could produce cerium and lanthanum metals using electrolysis.
These efforts were spurred along in the 1880s, when we discovered
the first significant commercial use for a rare earth element - the incandescent light mantle.
The mantle is a metal fabric bag that gets heated in a flame. Once it enters
into the flame, it shines very brightly in the visible spectrum. Such mantles
were commonly made from rare earth oxides and salts like thorium and cerium oxide.
This use case was not particularly big. But in 1903, mantle inventor Carl Auer
von Welsbach - an Austrian - patented an alloy for sparking those lamps.
This alloy was made of 30% iron and 70% mischmetal - which itself
is a mixture of the rare earths cerium, lanthanum, and neodymium.
The alloy is no longer necessary for general lighting as it used to
be but is still utilized as the "flint" in disposable lighters.
Coming up to the 1940s, many chemists tried to refine these elements using chemical
methods like thermal reactions, fractional crystallization, and fractional precipitation.
The rare earths elements tend to have very similar chemical traits - especially their
solubility. For this reason, these "classical methods" as they are now called can still work
for a specific element or two, but are generally acknowledged to do iffy work.
## Modern Methods
In 1942, researchers at the Ames Laboratory of Iowa State University discovered a new set
of methods to refine these rare earths at scale from their intermediate ores.
We call them the "modern methods".
The lab was founded by rare earths expert Frank Spedding at the behest
of the US government to produce pure uranium for the Manhattan Project.
Ames soon however branched off into metallurgy and other materials research - including
rare earths. There, researchers discovered the ion-exchange method.
The ion-exchange method uses an ion exchanger substance - an oxide or a
resin - to essentially swap the ions it has with the ions in a particular mixture. In doing so,
we are separating out rare earth element ions.
Ion exchange had been used in the Manhattan Project and was released
to the science community in 1947. Then in 1950, three American researchers advanced
the use of solvent extraction to refine thorium and rare earths.
Solvent extraction pull out a particular element out of a liquid
by relying on differences in the solubility of substances between itself and another liquid.
This is an immense simplification - the actual process can have hundreds of repetitive steps,
each using an immense amount of chemicals and water.
Solvent Extraction has turned out to be far more scalable,
though we know little about how companies actually do it. Ion exchange is today only
used for specific, unique situation rare earths for electronics needs.
## Mining
Sweden, Norway, Australia, and South Africa were early sources
for cerium and other rare earths. But not particularly good ones.
But then in 1949 the US Bureau of Mines discovered a large deposit at Mountain Pass,
California - about 50 miles away from Las Vegas. The Mountain Pass
mine was and still is North America's only economically competitive rare earths mine.
The mine is single-handedly responsible for stabilizing rare earths prices from
1958 to 1971, growing in line with American economic growth. At one
point it produced over 90% of the world supply.
The wide availability of the rare earths allowed us to find new applications for
them. For instance, in the late 1960s we discovered that adding rare-earth silicides gave
us high-strength low-alloy steel - a stronger and more corrosive-resistant steel than carbon steels.
## Rise of the Rare Earth Magnets
Then in the 1960s, scientists at Wright Patterson Air Force
Base discovered the first big rare earth magnet
A combination of the rare earth samarium with the transition metal cobalt.
Samarium-cobalt magnets dominated the market for several decades until political unrest in the
Democratic Republic of the Congo disrupted global cobalt supplies in the late 1970s.
Researchers in the United States and Japan looked for cobalt-free alternatives,
thus coming across a new, more powerful magnet - the Neodymium-iron-boron magnet.
Discovered independently in 1983 by Sumitomo - later Hitachi Metals - and General Motors,
this magnet saw better commercial adoption because it was stronger
and Neodymium and iron are far more plentiful than samarium and cobalt.
Production quickly expanded in the late 1980s as hard drive makers adopted it for use in their
products. It is used for motors and engines as well, though manufacturers often need to
add another rare earth element Dysprosium to help it tolerate higher temperatures.
## Changes
In 1985, American demand for rare earths collapsed after
new environmental legislation removed lead from gasoline.
At that time, the biggest demand consumption for these rare earths was for petroleum fluid cracking
catalysts. These fluids are used by refineries to convert petroleum into gasoline and other goods.
At the same time, new rare earth sources were discovered over in the People's Republic of China.
The most significant of which is the majestic Baiyunebo mine (白雲鄂博礦區) in China's Inner Mongolia.
The Baiyunebo is the world's largest known rare earths mine - the Ghawar Oil Field of rare earths.
It was first explored and developed in 1927 as an iron mine. But in 1935,
geologists discovered rare earth minerals monzanite and bastnasite at the mine. Starting
in the 1960s, the Chinese government sought to extract those rare earths out of them.
## Breaking Into the Market
Baiyunebo ore is a rather complicated mishmash of up to 14 rare earth minerals.
So it took twenty years to figure out how to separate them - which involves among other
things a complicated processing step known as "rare earth dressing" or "ore dressing".
In 1979, the Baotou Research Institute of Rare Earths discovered an acid roasting
process - where we cook the minerals alongside an
acid like sodium hydroxide - in order to decompose them into simpler compounds.
It is only after this is done, that we can employ a method like ion exchange or solvent extraction
to pull the elements themselves out of the intermediate compounds. In 1980, China exported
the first rare earths purified via ion-exchange to Japan, which attracted a great deal of attention.
From 1979 to 1989, rare earth output grew at 40% a year. Their scale not only allowed the
Chinese to produce more product at lower cost, but also make them at industry-leading purities.
In 2002, the Mountain Pass mine closed due to economic pressures,
leaving the Chinese with an extraction monopoly.
The Mountain Pass mine has recently reopened due to American concerns about supply chain
resiliency - especially regarding products that eventually go into defense systems.
Though ironically, most of those raw minerals are still shipped over to China for refining.
## Offshoring
China's mining dominance sparked a brain drain. Other players up and down the rare
earths supply chain relocated out of the United States and Japan into China.
An example of this is Magnequench, an American defense contractor
that produces Neodymium-iron-boron magnet powder. In 2003 they moved
their entire operations to Singapore, closing their Indianapolis office.
Then in 2004, they shut down their last factory,
fired 450 workers, and shipped all the machine tools to China.
They are not alone. In 2011, even Hitachi Metals - then the world
leader in magnet production - shifted their production to China in response
to China's export bans on rare earths, particularly dysprosium.
You might then think that these companies still do magnet-related R&D in the US,
right? However, a patent analysis done on rare earths-related research found a
decline in American-based rare-earth patents - while non-American patent filings surged.
## Rare Earth Magnets Today
Today, the most widely sold rare earth magnet is
the Neodymium-iron-boron magnet. The samarium-cobalt magnet comes second.
The rare earths are a critical and valuable component for both these magnets,
contributing just 20% of the weight but 30-50% of its overall value.
China's technology export restrictions on rare earth magnet refinement and production
are reminders of its continued grip on parts of the value chain outside of simple extraction.
Their mines might produce less of the global supply as new mines in
Australia or Vietnam come online, but Chinese facilities still refine and
manufacture over 90% of the world’s rare earth magnets.
China's 2015 magnet production reached 126,000
tons - a near fifty times increase from its 2,550 tons in 1997. And these are world-class
high quality magnets across a wide range of specs and at extremely competitive prices.
Having access to plentiful amounts of rare earths lets the Chinese extend their
manufacturing and innovation advantages. For example, the creation of cerium magnets that
replace Neodymium with the more plentiful cerium - cutting down material costs.
This industry growth is fueled and strengthened by China's burgeoning
demand for new energy systems like wind turbines and electric vehicles.
## The Need for Alternatives
Beyond the geopolitical concerns, we might not want to stake the entirety
of our green energy future on Neodymium and Dysprosium.
For one thing, these rare earths are expensive. A practical rare-earth-free
system would have material cost savings in the range of 30-66%.
Another thing is that removing them would substantially improve the technology's
“green-ness”. Greenhouse gas calculations are very fuzzy so take this with a grain of salt.
But one analysis published in 2015 notes that the Neodymium Iron Boron
magnet - with Dysprosium added - can make up to 30% of the greenhouse contribution
in an electric motor, despite being just 5% of the weight.
Judging the full environmental impact of these processes is challenging as we
do not have deep visibility into their production. Much of what
is done are trade secrets - like with semiconductor manufacturing.
## Recycle, Reduce
So what should we do?
One option is to reduce the amount of rare earths used in the magnet
itself. Particularly in dysprosium, which is far rarer than Neodymium but
is necessary in order for the magnet to operate properly at higher temperatures.
A second option would be recycling. Some 99% of the rare earth scrap from old hard drives,
EVs, and wind turbines is simply discarded.
But Neodymium-Iron-Boron magnet recycling technologies are undeveloped and currently
economically infeasible. In other words, the yields aren't great and
we don't have enough scrap right now to make the work worthwhile.
And the political, legal, and logistical shortcomings are also significant. It is
a similar issue as to recycling EV batteries. Do we have a good way
of putting these back into the ecosystem at scale?
## Alnico and Ferrite
Alnico and Ferrite magnets used to be the dominant permanent magnets in the market
before the rare earth magnets came along. Can they be modified to replace the rare earth magnets?
But unfortunately Alnico magnets suffer a high risk of demagnetization - in other words, low
coercivity. This makes them unlikely candidates for high power-density electric machines.
Ferrite magnets are far weaker than the rare earth magnets - they
are only a tenth as strong - and they also suffer low coercivity.
But interestingly, their coercivity rises at higher temperatures. That gives them an
advantage over the Neodymium Iron Boron magnet, which suffers the opposite. With some careful
engineering to avoid demagnetization, we can produce some workable motors.
News recently came out in December 2022 that Hitachi Metals - the original inventor of the
Neodymium Iron Boron magnet - is working on ferrite-based magnet alternatives. The
fact they are working on it and feel comfortable enough to announce it, I think means something.
It should also be noted that China is the world leader in Alnico and Ferrite magnet production.
But they don't have as strong a hold on it - with a 50% share in Alnico and 60% share in Ferrites.
## Motors without Permanent Magnets
Motors without permanent magnets do exist.
For items like cars and wind turbines, we can use an induction machine, or asynchronous motor.
These use an electric current to generate the necessary magnetism to operate properly.
Wind turbines are more ideal for these induction machines since
we have fewer space concerns. But they can work in cars too.
Tesla famously used a copper induction machine for their Model S car,
but then switched to a permanent magnet-based system for the Model 3.
In March 2023, they announced that their new EV motors would not have
any rare earth magnets in them. Perhaps they are using ferrites.
Two other electromagnetic-based motor families exist and have high potential - wound rotor
motors and switched reluctance motors. Renault has used the former for their Renault ZOE cars.
## Conclusion
Perhaps someday a game-changing alternative can be brought to the market.
People are working to make it happen and I commend them for it. Alternatives are necessary. But right
now, not enough people care and permanent magnets are still the most economically viable option.
China's big wind turbine and electric vehicle industries represent huge
demand markets that will continue to drive innovation much like the
computer assembly markets of Asia drove semiconductor innovation downstream.
So for now, I think China’s grip on the permanent magnet market is unshakeable.