FAQ - Frequently Asked Questions

Situation

The cost for the raw material neodymium, which is the determining factor for pricing a neodymium iron boron magnet, increased about fivefold between January 2011 and June 2011. The main producer China severely restricted its export and thereby inflated prices.

Luckily, the situation has relaxed since September 2011, which allowed us to reduce our shop prices several times. However, the prices will continue to be subject to fluctuations.

Price reduction from July 2011 to October 2012

Since July 2011 prices have remained stable and even dropped again. We have since carried out five price reductions: in July, September and November 2011 as well as in April and October 2012.

Price development for rare earth metals relevant to us

Neodymium Nd: Neodymium is a crucial component of extremely strong magnets (chemical formula Nd₂Fe₁₄B), like the ones we are selling.

Praseodymium Pr: Developments in recent years showed that you can use praseodymium in neodymium iron boron magnets. Since praseodymium (atomic number 59) is now considered a possible alternative to the overused neodymium (atomic number 60), its demand increased dramatically (see graph).

Dysprosium Dy: Magnets with a high energy product (high remanence and coercive field strength) contain up to 6% of the element dyprosium (atomic number 66). The extraction of dysprosium is significantly more expensive than the extraction of the other elements iron (Fe) and boron (B), which makes neodymium magnets as a whole more expensive.

Consequences for supermagnete and you as a customer

The combination of artificial shortage, increased demand and monopoly will most likely contribute to an unstable price development in the future, which we have to pass on to our customers. However, we strive to pass on price reductions immediately and aim to keep increases as moderate as possible.

Review: What happened in 2010/2011?

Already in 2010, the Chinese government started reducing the export of rare earth metals, including neodymium. In 2011, the export quota decreased even more and measures were taken to implement and monitor the export quota. To accomplish that, most small mines were closed and the control of these raw materials was assigned to one state-controlled entity. This entity can now enforce the quotas specified by the government and, thereby, manipulate the price at will by creating a shortage.

Reasons for export restrictions

• China would like to export high-quality products that contain these raw materials rather than just export the raw materials or raw magnets and, therefore, capture the added value in the country. They'd rather sell motors and generators with neodymium magnets than just the raw materials.
• The supply for rare earth metals is limited. China anticipates that the internal consumption in the country will increase substantially in the coming years, due to the development of wind power for instance (a wind turbine generator contains up to 500 kg of neodymium magnets). This causes China to restrict the sale and stockpile those raw materials, so they will not run out in coming years.
• China realized that they can now demand much for money for these raw materials than in the past, since the country gained a monopoly position.

Outlook: What's to come?

Other countries used to mine these raw materials. Only approx. 1/3 of the worldwide deposit is in China. But years ago, China flooded the world market with unbeatably cheap rare earth metals and magnets, which made it economically unviable for most mines and magnet producers outside of China to stay in the business. As a consequence, the whole world relied on supplies from China.

As the prices started to explode in 2011 and the fatal dependence was recognized, some of those mines started producing again. However, the know-how for the elaborate and complicated beneficiation of raw materials has been lost. Also, since a mine can't start operations from one day to the other, observers don't see realistic alternatives to Chinese companies before the end of 2012. Also, the demand for neodymium magnets continues to increase worldwide.