Why the price of neodymium magnets soaring?
Neodymium magnet status
The cost for the raw material neodymium, which is the determining factor in pricing a neodymium iron boron magnet, increased about fivefold between January 2011 and June 2011. Already in 2010, raw material prices doubled. China practically holds a monopoly on those raw materials. The country severely restricted the export and thereby sent prices soaring.
Reasons for export restrictions
- China would like to export high-quality products that contain these raw materials rather than just export the raw materials or raw materials and, therefore, capture the added value in the country. They rather sell motors and generators with neodymium magnets than just the raw materials.
- The supply for rare earth metals is limited. China anticipates that the internal consumption in the country will increase substantially in the coming years, due to the development of wind power for instance (a wind turbine generator contains up to 500 kg of neodymium magnets). This causes China to restrict the sale and stockpile those raw materials, so they will not run out in coming years.
- China realized that they can now demand much for money for these raw materials than in the past, since the country gained a monopoly position.
Price development for rare earth metals
Neodymium Nd: Neodymium is a crucial component of extremely strong magnets (chemical formula Nd2Fe14B), like the ones we are selling.
Dysprosium Dy: Magnets with a high energy product contain up to 6% of the element dyprosium (atomic number 66). The extraction of dysprosium is significantly more expensive than the extraction of the other elements iron (Fe) and boron (B). The combination Dy-Fe has been bought up in huge amounts in recent months, which lead to steep price increases (see graph).
Praseodymium Pr: Developments in recent years showed that you can use praseodymium in neodymium iron boron magnets. Since praseodymium (atomic number 59) is now considered a possible alternative to the overused neodymium (atomic number 60), its demand increased dramatically (see graph).