The B2B platform for full-electric and plug-in hybrid electric vehicles: Industry News

With China’s limit on exports of Rare Earth Metals, the EV industry could face at least short term supply constraints for these materials that are necessary for electric motor magnets and batteries. A new report for the UK government analyses the problems concerning supply, demand and alternatives.

A report prepared for the UK Department for Transport warns that the growing demand from hybrid and electric vehicles for the rare earth elements (REE) neodymium and lanthanum that are necessary for magnets for the electric motor and NiMH batteries could exceed the supply from China. Wind turbines also need neodymium for gearless generators and as such the wind power sector is likely to compete with the EV sector, according to the report by consultants Oakdene Hollins.

China to ban EV metal export?

Main cause for the supply shortage is China’s strategy to limit exports of REEs, the report says. The government is this way aiming to encourage the manufacture and export of higher value goods such as magnets, motors and batteries using Rare Earths. Even a ban on the export from 2015 on is in preparation. Today China is producing 95% of the metals, however, other substantial REE reserves exist in different countries, including the US and Australia. it is the required time to develop resources in operational mines that poses a restraint so far. In that respect, between two and four new mines are likely to open outside China, namely in the United States, Australia and Canada by 2014.

Key findings of the report give an overview of future demand and supply as well as applications for REEs and their alternatives:

Supply

China as the world’s largest producer is likely to remain the dominant producer due to the time required in developing new mine capacity. A tightening of controls for both the production and exports of Rare Earths is happening in China.

Rare earth applications

The key applications for hybrid and electric vehicles are the magnets required in the motors and also in the batteries. REE magnets contain neodymium and dysprosium together with iron and boron, but it is possible to substitute and alter the composition as required. NiMH batteries use lanthanum, but also other REEs are contained in the mischmetal often used. Hybrid vehicles are the dominant user of NiMH, but Li-ion batteries are expected to become the battery of choice. The demand for REEs in batteries will naturally decline as manufacturers shift from NiMH batteries towards lithium-based technology.

Demand

China has the highest demand for Rare Earths at close to 60% of the world demand. Demand is expected to grow at 8-11% per annum for Rare Earths with fastest growth in the magnets and metal alloys required for hybrid and electric vehicles. Prices have risen most for the REE that can be used for magnets, although prices fell off during the recession. All the forecasts expected strong growth in hybrid sales, but there is wide variation in forecasts for electric and plug-in hybrid vehicles. Wind turbines are likely to be a competing demand on neodymium due to the trend towards gearless generators.

In the short term there will be supply constraints while new mines come into operation, but in the long term reserves will meet forecasted demand.

Background - Rare Earth Elements

Rare Earth Element (REEs) are a group of metals with have many high-technology applications. The current generation of hybrid and electric vehicles and wind turbines uses substantial quantities of REEs in the form of high-strength magnets and rechargeable batteries. The key REEs used for these applications are neodymium, dysprosium and terbium (for the permanent magnets) and lanthanum (for the batteries).