How we got to this point
When we are home, like this summer, we are frequently asked why we live in China. It's hard for family and friends to imagine why we came to China, far from the familiar, and continue to live here. We came here because Randy needed work, and the work was here. The magnet industry basically no longer exists in the United States. An industry that once employed thousands in the US now employs only a few hundred. Jobs for people with our experience are scarce in our home country.
Earlier today, Randy and I exchanged some recent news items of particular interest to us as they deal with the manufacturing of magnets. One is about how China is handling the growth of their rare earth metals (and magnets) industries, and the other about the how the United States is approaching this. Both have the potential to have serious impact on Randy's livelihood, and possibly mine, too, should I have the need or opportunity to work again as an engineer. Both paint very different pictures about the future of magnet manufacturing.
Randy emailed me this Global Times story announcing the development of a new Rare Earth industrial center in Jiangxi Province. The expected total investment, according the article, for developing mining, separation, processing, and other down-stream manufacturing of the rare earth materials is 100 billion yuan, or US$14.7 billion. If I'm reading the article correctly, the initial investment commitments from several partners is 7.3 billion yuan, or a little more than US$1 billion. This seems to me to be almost a duplicate of what already exists in Baotou.
I then looked up news articles about Molycorp, a US-based company that is working towards re-opening a California rare earth mine and refurbishing or establishing the separation and refining of the ores, with a eye especially towards the magnet industry. The operations at Mountain Pass Mine were closed in 2002 due to lapsed permits, and after that rare earth materials were no longer mined in the US. As the new owners of this mine, Molycorp was planning to raise money with an IPO (up to half a billion dollars, they were hoping), though their share price was cut to $14 as the shares were not moving at the initial offering price. While I am not-so-secretly pulling for Molycorp's success, I have to wonder if this IPO is the last chance for American magnets.
The reasons why there are so few magnet companies in the US, and none that produce rare earth magnets of the type NdFeB (which were invented by General Motors), are many. Most people in the magnet industry focus on the sale of Magnequench to Chinese investors, though, as the turning point (for more on this, and depending on your political stripe, you may like the take from heritage.org or inthesetimes.com--one is conservative and one is liberal), and that does seem to be critical. As Magnequench moved its facilities to China, other NdFeB plants in the US were also soon closed in the following years, unable (or unwilling to find ways) to compete with the imports from China.
One thing that was batted around at that time and then again during the Hillary Clinton Presidential campaign was that crucial defense technology was exported during the sale of Magnequench. I have to agree with former MQ executive Andy Albers who said in this ABC News report that no unique magnet formulation, manufacturing, or application technology went to China in the deal, at least, none they did not already possess. They were not any closer to understanding American Smart Bombs (one accusation that arises when pundits discuss MQ) after production was moved from Indiana to China than before. What the US did lose, as stated in this paper produced by Electron Energy Corporation is that the supply is limited to imports, and therefore, at risk. EEC, by the way, is one of the few remaining magnet producers in the United States, specializing in the manufacture of a type of rare earth magnets in the SmCo family. Any industry in the US that needs NdFeB magnets, whether it be defense, or energy, or automotive, will be buying these from other countries, and this supply cannot be guaranteed. The needs in the US for NdFeB magnets is still increasing, even though the US today does not mine or produce these materials. Wind generators and electric vehicles are both expected to increase NdFeB usage in coming years. While there are companies in the US developing these needed technologies, there are no magnet producers in the US to support them.
And that brings us to why we are here in China. In the US, Molycorp struggles to raise money on the stock exchange to restart US capability (and lessen dependence on foreign magnets). In China, they are practically giving money away to continue to grow their rare earth and magnet industries. Deng Xiaoping remarked in 1992 that "There is oil in the Middle East; there is rare earth in China" and Jiang Zemin followed this up in 1999 during a trip to Baotou in which he confirmed that China needed to "improve the development and applications of rare earth, and change the resource advantage into economic superiority." All these years rare earth materials have been clearly visible to the highest levels of the Central Government of the PRC, considered to be a strategic resource. It has been barely a blip on anyone in the US government's radar, except during political campaigns. Then everyone wants to talk about it.
Earlier today, Randy and I exchanged some recent news items of particular interest to us as they deal with the manufacturing of magnets. One is about how China is handling the growth of their rare earth metals (and magnets) industries, and the other about the how the United States is approaching this. Both have the potential to have serious impact on Randy's livelihood, and possibly mine, too, should I have the need or opportunity to work again as an engineer. Both paint very different pictures about the future of magnet manufacturing.
Randy emailed me this Global Times story announcing the development of a new Rare Earth industrial center in Jiangxi Province. The expected total investment, according the article, for developing mining, separation, processing, and other down-stream manufacturing of the rare earth materials is 100 billion yuan, or US$14.7 billion. If I'm reading the article correctly, the initial investment commitments from several partners is 7.3 billion yuan, or a little more than US$1 billion. This seems to me to be almost a duplicate of what already exists in Baotou.
I then looked up news articles about Molycorp, a US-based company that is working towards re-opening a California rare earth mine and refurbishing or establishing the separation and refining of the ores, with a eye especially towards the magnet industry. The operations at Mountain Pass Mine were closed in 2002 due to lapsed permits, and after that rare earth materials were no longer mined in the US. As the new owners of this mine, Molycorp was planning to raise money with an IPO (up to half a billion dollars, they were hoping), though their share price was cut to $14 as the shares were not moving at the initial offering price. While I am not-so-secretly pulling for Molycorp's success, I have to wonder if this IPO is the last chance for American magnets.
The reasons why there are so few magnet companies in the US, and none that produce rare earth magnets of the type NdFeB (which were invented by General Motors), are many. Most people in the magnet industry focus on the sale of Magnequench to Chinese investors, though, as the turning point (for more on this, and depending on your political stripe, you may like the take from heritage.org or inthesetimes.com--one is conservative and one is liberal), and that does seem to be critical. As Magnequench moved its facilities to China, other NdFeB plants in the US were also soon closed in the following years, unable (or unwilling to find ways) to compete with the imports from China.
One thing that was batted around at that time and then again during the Hillary Clinton Presidential campaign was that crucial defense technology was exported during the sale of Magnequench. I have to agree with former MQ executive Andy Albers who said in this ABC News report that no unique magnet formulation, manufacturing, or application technology went to China in the deal, at least, none they did not already possess. They were not any closer to understanding American Smart Bombs (one accusation that arises when pundits discuss MQ) after production was moved from Indiana to China than before. What the US did lose, as stated in this paper produced by Electron Energy Corporation is that the supply is limited to imports, and therefore, at risk. EEC, by the way, is one of the few remaining magnet producers in the United States, specializing in the manufacture of a type of rare earth magnets in the SmCo family. Any industry in the US that needs NdFeB magnets, whether it be defense, or energy, or automotive, will be buying these from other countries, and this supply cannot be guaranteed. The needs in the US for NdFeB magnets is still increasing, even though the US today does not mine or produce these materials. Wind generators and electric vehicles are both expected to increase NdFeB usage in coming years. While there are companies in the US developing these needed technologies, there are no magnet producers in the US to support them.
And that brings us to why we are here in China. In the US, Molycorp struggles to raise money on the stock exchange to restart US capability (and lessen dependence on foreign magnets). In China, they are practically giving money away to continue to grow their rare earth and magnet industries. Deng Xiaoping remarked in 1992 that "There is oil in the Middle East; there is rare earth in China" and Jiang Zemin followed this up in 1999 during a trip to Baotou in which he confirmed that China needed to "improve the development and applications of rare earth, and change the resource advantage into economic superiority." All these years rare earth materials have been clearly visible to the highest levels of the Central Government of the PRC, considered to be a strategic resource. It has been barely a blip on anyone in the US government's radar, except during political campaigns. Then everyone wants to talk about it.
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