Now one could conclude, that the West not only depends on China’s rare earths, but also on China’s permanent magnets.
We think the West is about to move past that point: The western import dependence is on components and products manufactured from rare earths and permanent magnets, moving a step higher on the value chain that current concepts suggest.
One of the current battles is on for the dominance in traction motors for electric vehicles, containing NdFeB magnets (we reported).
Are junior rare earth miners beating a dead horse?
One thing for sure, for consumption in the West we currently need an additional large rare earth mine as urgently as we need a third shoulder.
What? Why?!In the first half 2020 China exported 142 t neodymium oxide, valued at US$ 6.7 mio, 24 t less than in the second half 2019.
Further 77.7 t of praseodymium oxide, valued at US$ 3.45 mio, 42 t more than in the second half of 2019.
Yes, we know that the bulk of China exports and the bulk of western demand are dirt-cheap lanthanum and cerium, but the noisy hype is about neodymium and praseodymium.
There is no point opening or even planning to open an operation that churns out thousands of tons of NdPr with almost nowhere but China to go to.
Only if demand in the West should increase more than 10 times, there may ba a point.
There are forecasts to that effect, however, many previous spectacular forecasts in the rare earth scene flopped, seriously undermining general credibility of rare earth consumption forecasts.
These forecasts are not made by fools, but most forecasts simply underestimate China dynamics. Read on.
Forecasts for 2025 world NdFeB magnet demand of the usual western suspects are much lower than that.
Overcapacity and overproduction, which usually has an adverse impact on prices, particularly, if there is competition for market share.
Little wonder that Hitachi Metals want to rid themselves of their magnet business, in view of the expiry of their core patents and this China magnet tsunami.
Assume you are a western NdFeB magnet producer, you will have to pay the China price for the rare earth input, no matter if the supplier is in China or elsewhere. The trouble is, that China price includes China VAT and China does not refund its 13% VAT upon export of rare earth products, while domestic VAT is cost-neutral in-out. So as a non-China NdFeB magnet producer already your raw material cost are already 13% higher than any China domestic NdFeB magnet maker. To add injury to insult, Chinese NdFeB magnets get a full VAT refund upon export. This means almost certain death for non-China based permanent magnet production when competing with China, but it is great news for those who buy permanent magnets.