Grim Supply, Price Scenario Push Rare Earth Manufacturers to Scour New Options

The gloomy scenario of the world's rare earth metals (REM) industry, compounded by a shrinking supply and expensive market prices, have pushed consumers to scout alternative materials to aid their respective manufacturing activities that mostly rely on the precious REM.

Large manufacturing companies in Europe, Japan and the United States involved in the automobile industry and wind turbine manufacturing, among others, have been devoting time for research and development to come out with an alternative, and possibly low-cost, to the REM they require for their products, which is neodymium. Neodymium is commonly used to manufacture magnets.

German parts supplier Continental AG announced the invention of an electric motor operating without permanent magnets. Auto company Renault has reportedly started adopting in two of its electric vehicles the new motor invention.

"We are trying to reduce the effect of [rare earth] cost increases by optimizing our processes and using alternative materials," Günter Fella, head of purchasing in Continental automotive division, was quoted by Proactiveinvestors as saying.

German wind turbine manufacturer Enercon has also begun utilizing an electrical system to generate the necessary magnetic field required by its generators.

"The rare earth squeeze has made companies go full bore looking for alternatives," Ames Laboratory in Iowa said.

"But it's essential that the industry finds a commercially sensible arrangement involving the entire supply chain," Fella said.

In September, U.S. rare earths supplier Molycorp Corp. said it has also started using permanent magnets that do not require dysprosium, another very scarce REM.

Over the last two years alone, the cost of neodymium has grown 10 times, while prices of dysprosium have skyrocketed nearly 20 times in the last one year.

Ames Laboratory is currently experimenting to substitute REM in magnets with electrolytic manganese.

"Electrolytic manganese holds the potential to double the magnetic strength relative to current magnets while using raw materials that are inexpensive and abundant," researchers said, adding manganese has been found to be one of the more diversified metals that can be used as a possible alternative.