Industry explores rare earth options
The electric motor displayed by Continental at this year’s Frankfurt motor show lacked the crowd-drawing cachet of a glittering Ferrari or Lamborghini sports car. But the German parts supplier’s invention – now being deployed by Renault in two of its electric models – attracted plenty of interest from industry buffs because it operates without using permanent magnets.Such magnets create rotational motion and lie at the heart of many electric motors and generators. However, they are commonly produced using neodymium, a “rare-earth metal” whose cost has increased 10-fold over the past two years.
“We are trying to reduce the effect of [rare earth] cost increases by optimising our processes and using alternative materials,” says Günter Fella, head of purchasing in Conti’s automotive division. “But it’s essential that the industry finds a commercially sensible arrangement involving the entire supply chain.”
The 17 rare earth elements – some of which have magnetic and luminescent properties – are used in a variety of products including batteries, plasma television screens and energy saving lightbulbs. China accounts for about 97 per cent of global rare earth production and its drive to close down illegal, polluting plants and cut export quotas caused prices to rocket this year.
Price rises cut into profit margins and in some cases forced manufacturers to raise their prices. Osram, the Siemens-owned lighting company, raised the price of some energy-efficient bulbs and fluorescent tubes by about 20 per cent this summer due to what it termed an “explosion” in raw material prices, including rare earths.
More importantly, the tougher Chinese quotas triggered industry worries about the security of rare earth supplies and unfair competition.
When Angela Merkel, the German chancellor, visited the Bosch stand at the Frankfurt motor show, Franz Fehrenbach, chief executive of the car parts supplier, urged her to tackle the problem, a person close to the company said.
Such pressure appears to be working. During a recent visit to Mongolia, Ms Merkel pushed for greater co-operation on rare earth metals. German officials travelled to Kazakhstan in April in an effort to secure access to the metals and in July Russia also offered to help Germany secure rare earth supplies.
Although rare earth prices have declined significantly in recent weeks amid fears of a global economic slowdown, German industry does not expect the situation to improve dramatically anytime soon. It is, therefore, reacting by trying to tap new rare earth sources, to use fewer rare earths in products and to recycle these elements where possible.
The Federation of German Industries (BDI) is also evaluating the potential for a corporate alliance to invest in raw material projects overseas that could enable businesses to gain improved access to rare earths. Daimler, the Stuttgart-based car and truckmaker, is backing the initiative.
“German industry is increasingly aware that it needs to make more use of existing options for directly securing raw material supplies, particularly rare earths,” said Carsten Rolle, managing director of energy and raw materials at the BDI. “However, even if the BDI’s concept proposal is realised, it will only change the picture to a limited degree – our industry will always depend on functioning raw material markets.”
Some companies are already taking matters into their own hands. Siemens – whose wind turbines use magnets containing several hundred kilos of neodymium – is planning to establish a joint venture with Australia’s Lynas Corporation for the production of neodymium-based rare earth magnets. Lynas will provide the raw materials via a plant in Malaysia that is due to be completed early next year.
BASF, the world’s biggest chemical maker by sales, has signed a supply agreement with Lynas for lanthanum, a raw material used in BASF’s petroleum refining and chemical catalysts.
Companies are also exploring ways to use fewer rare earths in their products and to recycle more.
Enercon, the German wind-turbine manufacturer, uses an electrical system to create the magnetic fields for its generators that forgoes the need for neodymium-based magnets, for example.
Loser Chemie, a small water treatment company in Saxony, eastern Germany, is exploring ways to recycle rare earths from the glowing white powder in energy-saving lightbulbs.
Andreas Gontermann, chief economist at ZVEI, the German electrical and electronics industry association, says these efforts, though welcome, are no substitute for political pressure to persuade China to export more rare earths.
“Recycling, rare earth substitutes and efficiency increases can all play a part but they won’t suffice to solve the problem,” he says. “That’s why it is necessary to have political engagement to ensure unrestricted market access.”
“We are trying to reduce the effect of [rare earth] cost increases by optimising our processes and using alternative materials,” says Günter Fella, head of purchasing in Conti’s automotive division. “But it’s essential that the industry finds a commercially sensible arrangement involving the entire supply chain.”
The 17 rare earth elements – some of which have magnetic and luminescent properties – are used in a variety of products including batteries, plasma television screens and energy saving lightbulbs. China accounts for about 97 per cent of global rare earth production and its drive to close down illegal, polluting plants and cut export quotas caused prices to rocket this year.
Price rises cut into profit margins and in some cases forced manufacturers to raise their prices. Osram, the Siemens-owned lighting company, raised the price of some energy-efficient bulbs and fluorescent tubes by about 20 per cent this summer due to what it termed an “explosion” in raw material prices, including rare earths.
More importantly, the tougher Chinese quotas triggered industry worries about the security of rare earth supplies and unfair competition.
When Angela Merkel, the German chancellor, visited the Bosch stand at the Frankfurt motor show, Franz Fehrenbach, chief executive of the car parts supplier, urged her to tackle the problem, a person close to the company said.
Such pressure appears to be working. During a recent visit to Mongolia, Ms Merkel pushed for greater co-operation on rare earth metals. German officials travelled to Kazakhstan in April in an effort to secure access to the metals and in July Russia also offered to help Germany secure rare earth supplies.
Although rare earth prices have declined significantly in recent weeks amid fears of a global economic slowdown, German industry does not expect the situation to improve dramatically anytime soon. It is, therefore, reacting by trying to tap new rare earth sources, to use fewer rare earths in products and to recycle these elements where possible.
The Federation of German Industries (BDI) is also evaluating the potential for a corporate alliance to invest in raw material projects overseas that could enable businesses to gain improved access to rare earths. Daimler, the Stuttgart-based car and truckmaker, is backing the initiative.
“German industry is increasingly aware that it needs to make more use of existing options for directly securing raw material supplies, particularly rare earths,” said Carsten Rolle, managing director of energy and raw materials at the BDI. “However, even if the BDI’s concept proposal is realised, it will only change the picture to a limited degree – our industry will always depend on functioning raw material markets.”
Some companies are already taking matters into their own hands. Siemens – whose wind turbines use magnets containing several hundred kilos of neodymium – is planning to establish a joint venture with Australia’s Lynas Corporation for the production of neodymium-based rare earth magnets. Lynas will provide the raw materials via a plant in Malaysia that is due to be completed early next year.
BASF, the world’s biggest chemical maker by sales, has signed a supply agreement with Lynas for lanthanum, a raw material used in BASF’s petroleum refining and chemical catalysts.
Companies are also exploring ways to use fewer rare earths in their products and to recycle more.
Enercon, the German wind-turbine manufacturer, uses an electrical system to create the magnetic fields for its generators that forgoes the need for neodymium-based magnets, for example.
Loser Chemie, a small water treatment company in Saxony, eastern Germany, is exploring ways to recycle rare earths from the glowing white powder in energy-saving lightbulbs.
Andreas Gontermann, chief economist at ZVEI, the German electrical and electronics industry association, says these efforts, though welcome, are no substitute for political pressure to persuade China to export more rare earths.
“Recycling, rare earth substitutes and efficiency increases can all play a part but they won’t suffice to solve the problem,” he says. “That’s why it is necessary to have political engagement to ensure unrestricted market access.”
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