Rare Earth Scare
Yesterday the New York Times published a story about the Chinese government stopping rare earth exports to Japan. This was followed by reports by other news services that this wasn't true, or at least verified (yesterday was a holiday in both China and Japan), though this from the Wall Street Journal was the best sourced, with the reporter actually talking directly to Japanese buyers of rare earth materials. There has been a general reduction in available rare earth metals for export already, but it probably won't be clear until after the holiday what exactly has happend. The English-language Japan times reported this morning that while China's trade ministry is denying that there is an official stop in trade, there may be an unofficial stop-order on current shipments.
Even before the current diplomatic problem between Japan and China, Japanese industries have recognized the limits to the rare earth supply from China. The country has a highly regulated stockpiling program in place for rare earth metals, similar to those many countries have for oil. Showa Denko, among whose businesses include rare earth alloying, has already begun developing a site in Vietnam. This is in addition to their existing operations in Japan (which works off of imported material) and in China near the mines at Baotou and Jiangxi province. In addition other companies, like Santoku, still have alloying facilities in the US (serving few manget customers but still many other users of rare earth alloys) as well as other places around the world. If the response from Japan has been muted, it could be because they have contingencies already in place.
Another great step Japan has taken in recognizing the limits to supply, is to limit material waste. Adam Minter has this great post about what he saw at Toyota last year, out-of-use batteries that would be going through a proprietary process so that the pricy rare earth materials could be reused. On the magnet side (where my experience lies), Japanese producers have little waste. They often press in discrete cavities, achieving near-net-shape to minimise later grinding operations. This requires tightly controlled pressing and sintering processes. Most of the magnet material that is removed in grinding can be reclaimed and remelted. This requires, again, tight controls and deep understanding of the chemistry. A benefit to this is, obviously, cost reduction. In my last days working for a magnet company in the US, several Japanese producers were able to compete head-to-head with American-produced rare earth magnets on price to American customers.
To contrast, in China, most producers press large blocks and then slice, and cut, and grind to achieve the final geometries. There's not as dire of a need to minimise or reuse material because historically the supply has not been as limited inside of China. And as long as cost targets are met, there's not as much motivation to cut material waste. Those days will inevitably come, but they are not here now.
Updated 12:30: Again from the New York Times, same story, more sources.
Even before the current diplomatic problem between Japan and China, Japanese industries have recognized the limits to the rare earth supply from China. The country has a highly regulated stockpiling program in place for rare earth metals, similar to those many countries have for oil. Showa Denko, among whose businesses include rare earth alloying, has already begun developing a site in Vietnam. This is in addition to their existing operations in Japan (which works off of imported material) and in China near the mines at Baotou and Jiangxi province. In addition other companies, like Santoku, still have alloying facilities in the US (serving few manget customers but still many other users of rare earth alloys) as well as other places around the world. If the response from Japan has been muted, it could be because they have contingencies already in place.
Another great step Japan has taken in recognizing the limits to supply, is to limit material waste. Adam Minter has this great post about what he saw at Toyota last year, out-of-use batteries that would be going through a proprietary process so that the pricy rare earth materials could be reused. On the magnet side (where my experience lies), Japanese producers have little waste. They often press in discrete cavities, achieving near-net-shape to minimise later grinding operations. This requires tightly controlled pressing and sintering processes. Most of the magnet material that is removed in grinding can be reclaimed and remelted. This requires, again, tight controls and deep understanding of the chemistry. A benefit to this is, obviously, cost reduction. In my last days working for a magnet company in the US, several Japanese producers were able to compete head-to-head with American-produced rare earth magnets on price to American customers.
To contrast, in China, most producers press large blocks and then slice, and cut, and grind to achieve the final geometries. There's not as dire of a need to minimise or reuse material because historically the supply has not been as limited inside of China. And as long as cost targets are met, there's not as much motivation to cut material waste. Those days will inevitably come, but they are not here now.
Updated 12:30: Again from the New York Times, same story, more sources.
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