Rare Earth – Who Needs It?

Bertel Schmitt
by Bertel Schmitt

Last year, tensions ran high – about dirt. Emotions were whipped up about a Chinese embargo on stuff most people never had heard of: Rare earth. The stuff is used to make magnets that go into anything from hard drives to generators and electric motors. Cooler heads tried to point out that rare earth is not rare at all, and that China has as much a monopoly on rare earth as it has on sand. Nobody listened to the cooler heads, and rare earth prices went stratospheric. Step aside, those rare earth prices are crashing down.

Says Bloomberg:

“Rare-earth prices are set to extend their decline from records this year as buyers including Toyota Motor Corp. and General Electric Co. scale back using the materials in their cars and windmills. Prices for cerium and lanthanum, the most abundant rare- earth elements, will drop by 50 percent in 12 months.”

As promised in January, engineers at Toyota developed a new “induction”-type electric motor that did not only let the Chinese eat their own rare dirt, but also promised to be more efficient and more compact than the current fixed-magnet motors.

On the back of these news, and a cooling off of auto demand and electric car exuberance, rare earth prices started coming down in August and continue to go south. It’s not just supply and demand: Speculators are fleeing the stuff, and instead of an embargo there are now stories of rare earth dumping in China.

Toyota’s new technology exited the labs and is going in series production. John Hanson, a Toyota spokesman in Torrance, California, confirmed to Bloomberg that “moving from a fixed-magnet motor to an induction motor is a huge savings with regard to rare-earth metals.”

GM will sell a Chevrolet Malibu Eco next year that uses an induction motor, and will cut down on magnets that use the no longer so rare earths.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • GS650G GS650G on Sep 30, 2011

    Since money can't be made the old fashioned way everyone is looking for the escalator to riches and wealth. This is no different from any other commodities broker. Back in the 70's a civil war in Zaire cut off the world's cobalt supply. Alnico magnets used cobalt and it forced a move to Ferrite magnets, undoubtedly a better material and smart move. Cobalt prices never recovered from the crash as demand weakened. Now if someone finds a way to control the air and water supply through a single entity then they have something. And the governments will find a way to tax it as well.

  • Hermaphroditolog Good hybrid cars use ICE implosion mode.Mercedes-EQXX uses implosion turbines (turboexpanders) for regeneration from heat losses.
  • Kosmo I, for one, and maybe only one, would buy a 5.0 L, stickshift variant of the sedan/hatchback that is Ford's "Not A Mustang EV" tomorrow.I'd buy the sportwagon version yesterday.
  • Akear I am counting the days when Barra retires. She has been one long nightmare for GM. People don't realize the Malibu outsells all GM EVs combined.
  • Redapple2 you say; most car reviewers would place it behind the segment stalwarts from Honda and Toyota,........................... ME: Always so. Every single day since the Accord / Camry introduction.
  • Akear GM sells only 3000 Hummer EVs annually. It is probably the worst selling vehicle in GM history.