Will rare-earth demand and China’s control force new e-motor designs?

  • 17-Nov-2011 01:53 EST
Jack Lifton at podium SAE Emotors 2011.JPG

Addressing the SAE E-Motors Symposium, TMR founder Jack Lifton says rising rare-earth metals prices are inspiring new RE-free motor designs. (Lindsay Brooke)

Blog from the 2011 SAE International E-Motors Symposium

SHANGHAI, CHINA, Thursday midday, Nov. 17, 2011—“I don’t see a change in China being in control of rare-earth metals used for magnets for at least the rest of this decade,” said Jack Lifton, Founding Principal of Technology Metals Research. “And if I were you, I’d worry about the price and availability of dysprosium.”

Lifton had the attention of the 2011 SAE Electric Motors Symposium audience (many of whom were Chinese engineers) from the moment he took the stage here Nov. 16. The frank-talking metals analyst was invited to provide insight into one of the most important topics facing the global auto industry: the future of rare-earth metals (RE) and their impact on vehicle electrification.

REs are essential in the production of permanent magnets used in hybrid and electric-vehicle traction motors. The magnets’ base constituents—neodymium, iron, and boron (NdFeB)—are alloyed with dysprosium, praseodymium, and cobalt to maximize their desirable properties in the type of high-performance magnets required in electrified powertrains.

REs’ 10% annual growth rate is being driven by demand (primarily in Asia) for traction motors, among other types. Demand for neodymium, which makes up about 26% of an RE magnet, is forecast by Lifton to double in the next 10 years as a result. Projections for EV and hybrid vehicle market growth in North America, Europe, and Asia only increase worries about motor availability unless alternative materials emerge.

The global auto industry uses more than 80% of the world’s dysprosium, the total annual production of which is about 1000 t (1100 ton)—“and it’s all mined in Szechuan, China,” Lifton said. He added that China also has over 95% of the world’s RE processing technology.

Dysprosium supply “is only a problem for the rest of the world; it’s not a problem for China,” he stated, “and finding REs is not the issue—processing it is.”

Opening new mines would solve some of the demand in the short term. But to double dysprosium output, for example, would require production at six or seven new reserves that may not be profitable mining dysprosium exclusively. This would make it unlikely the mines would open—one of the catch-22 situations that surround RE supply.

Existence of RE ore, and viable projects to extract it profitably and process it, are often unrelated issues, Lifton explained. As of October 2011, he was tracking 393 RE development projects run by 244 different companies in 35 countries outside of China and India. The vast majority of the projects are in the early stages of development and “are unlikely to succeed because the trick is in where to find profit in the value chain,” he said.

Leveraging its hegemony on supply, China has been steadily raising prices for the materials. As of early November, dysprosium prices in China were at $2250 per kg, and more than $4000 in markets in the rest of the world. This, Lifton noted, could be a trigger for powertrain engineers to change the game.

“If you raise the price of dysprosium too much, it will get engineered out of traction motors,” he said. “There’s no way dysprosium can remain above $2000 a kilo.”

RE prices will remain volatile until new sources arrive or until RE-free motors are available. The industry is working hard on the latter, as evidenced at the SAE symposium (report to follow).

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