Status Quo and Outlook for China's NdFeB Magnet Industry      

1. Production
In 2010, China's output of rare earth permanent magnets was 82 600 tons (in kind), up 48.56% year on year, including: sintered NdFeB 78 000 tons, up 50% year on year; bonded NdFeB 4 000 tons, up 33.33% year on year; and samarium cobalt magnets 600 tons, flat with 2009. China's NdFeB magnet production of 2001-2010 is listed in Table 1.

Table 1  China's NdFeB magnet production in 2001-2010       (ton)
Year    Sintered NdFeB   YoY growth rate/%    Bonded NdFeB    YoY growth rate/%
2001    8000    23.00    500    11.00
2002    9000    12.50    1000    100.00
2003    13700    52.00    1300    30.00
2004    25000    82.50    1500    15.00
2005    33000    32.00    1800    20.00
2006    39000    18.18    1900    5.56
2007    48000    23.08    2300    21.05
2008    46000    -4.17    2800    21.74
2009    52000    13.04    3000    7.14
2010    78000    50.00    4000    33.33

2. Exports and imports
In 2010, China exported its rare earth permanent magnet products to 99 countries and regions, having an export volume of 13 885.92 tons (in kind), up 48.31% year on year; and having an export value of US$625.2921 million, up 66.13% over 2009 (see Table 2).

Table 2  Top 8 export destinations of China's rare earth permanent magnets in 2010
Ranking    Country or region    Export volume(ton)    Export value(US$ million)
1    Hong Kong    2197.72    123.48
2    USA    1740.16    64.89
3    South Korea    1232.80    59.31
4    Germany    1077.96    51.29
5    Italy    843.63    28.19
6    Singapore    746.51    36.79
7    Netherlands    625.08    23.57
8    Thailand    580.29    28.88

    In the same year, China imported 4069.91 tons of rare earth permanent magnets, up 57.81% over 2009; with an import value of US$251.2642 million, up 61.44% over 2009.

3. NdFeB capacity is expanding fast
The NdFeB permanent magnet is currently an important energy-saving material and has good prospects in wind power applications, inverter air conditioners and new energy vehicles. In the next 3-5 years, the demand for NdFeB is expected to grow 20% annually, on average. Major Chinese NdFeB producers are optimistic about the market prospects of NdFeB, and hence, are expanding their NdFeB production lines or building new NdFeB capacity.
   On March 23, 2011, Beijing Zhongke Sanhuan Hi-Tech Co Ltd (Zhongke Sanhuan) issued about 27 million non-public shares to raise a total of about RMB600 million. The funds will be used for the company's rare earth permanent magnetic materials capacity expansion and technical transformation projects in Beijing, Tianjin and Ningbo. With the completion of these projects, the company's production capacity for sintered NdFeB magnets will increase from the present 12 000 t/a to 18 000 t/a.
   On March 4, 2011, Beijing Advanced Technology & Materials Co Ltd (AT&M) released its 2010 annual report, indicating that its NdFeB business is growing steadily, and that a number of the firm's key industrial investment projects will go into production subsequently. It was reported that AT&M's "high-end new-type rare-earth permanent magnet (NdFeB) production line project" will mainly use rare earth permanent magnets to produce electronic components. This project will increase the company's NdFeB capacity by 1 000 t/a. It is expected to be put into production in the end of 2011.
   On February 25, 2011, Minmetals Sande (Ganzhou) Rare Earth Materials Co Ltd was set up in Ganzhou, Jiangxi province, indicating that China Minmetals is extending its rare earth industrial chain into the rare earth magnetic materials area. Minmetals Sande (Ganzhou) Rare Earth Materials Co Ltd was jointly set up by China Minmetals Corporation and Japan's Sande Inc mainly to produce master alloys for high-performance magnets. The project has a first-phase total investment of RMB100 million, a production capacity of 2 500 t/a and an annual sales income of RMB640 million. The project's second-phase investment will reach RMB30 million, achieving a magnet master alloy capacity of 5 000 t/a. By then, Minmetals Sande (Ganzhou) Rare Earth Materials Co., Ltd. will become the largest magnet master alloy manufacturer in China.
   The widespread expansion of NdFeB capacity is intensifying competition in the industry. Meanwhile, as long as rare earth prices keep soaring, low-end products that incorporate neodymium (Nd) will be less and less competitive. Some Shanxi province manufacturers have reportedly begun to reduce production of NdFeB products due to the price hikes and short supply of rare earth raw materials.

4. Major NdFeB producers' earnings grow fast
In 2010, Zhongke Sanhuan achieved a sales income of RMB2.36 billion, up 51.05% year on year; and a total profit of 290 million, up 168.6%.
    Also in 2010, Taiyuan Twin-Tower Aluminum Oxide Co Ltd achieved a net profit of RMB10.0786 million, up 18.07% over 2009; and a total sales income of RMB741 million, up 41.84%.
   At the same time, Ningbo Yunsheng High-Tech Magnetics Co Ltd achieved a sales income of RMB1.96 billion, up 96.2% over 2009; and a net profit of RMB 204 million. The profit of the company's NdFeB business unit increased substantially in 2010 over 2009.

5. Rare earth prices soar
China's Ministry of Finance and State Administration of Taxation recently issued a notice that, effective April 1, 2011, China will uniformly adjust its rare earth resource taxes (CCR No.8 2011). The adjusted tax rates are: RMB60 /t for light rare earth ores, including bastnaesite and monazite ores; and RMB30/t for heavy rare earth ores, including xenotime and ion-type rare earth ores. (Bastnaesite and monazite are the primary sources of neodymium (Nd) today.) The adjustment serves to establish and finance an environmental compensation fund to support the protection and restoration of the local mine eco-environment, and to support the processing, R&D and conservation of rare earth raw materials.
   Due to policy changes, rare earth prices have soared. At present, the Pr-Nd alloy prices have risen to RMB430 000 - 450 000 /t, Nd-Pr oxide to about RMB330 000 /t, and Dy-Fe alloy to about RMB2.5 million /t. Compared to the beginning of this