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Customer Information as at October 2011

After a tremendous price increase of the rare earths we have also been forced in summer to adjust our prices of NeoDeltaMagnet®, being magnets made from neodymium iron boron, continuously.
This also affects magnet systems which are equipped with these magnets, such as magnet ball joints, holding magnets, magnet systems for iron separation etc.
We regret this global price increase all the more, as we have kept our prices stable for many years. We keep this price stability for the other permanent magnets and magnet systems which are not affected by the price increase of the rare earths.
The prices of neodymium have been relatively stable on a high level for some weeks. Prices vary from week to week by +/- 10 to 15 %, depending on the supply situation in China, so that price validity for our offers can only be ensured for shorter periods. Our graduated prices of NeoDeltaMagnet® (NdFeB) and of the magnet systems equipped with it, i.e. the standard designs available from stock, are currently stable. We have increased our stock of standard magnets available from stock considerably so that we are able to deliver also larger quantities from stock at fixed prices.

Information on Magnets made from the Rare Earths

Since autumn 2010 prices of the rare earths were in a permanent upward trend; from mid-2011 there was a price explosion of up to 600 %. Neodymium is one of 17 elements of the rare earths and is required for the production of the magnetic material neodymium iron boron (NdFeB).

Since more than 10 years we have NdFeB and SmCo magnets produced by our quality-certified partner company in Ningbo/China. The magnets produced there are checked according to DIN EN ISO 9001, and with each delivery a test certificate and a measured and printed BxH demagnetization curve is included for each item. Thus every magnet delivery can be identified even after years.

The elements praseodymium (Pr) and dysprosium (Dy) only appear in small material proportions in the rare earths. The prices of these elements have exploded. These two elements are alloyed to the magnetic material neodymium, if NdFeB magnets with high coercive field strength (H) and remanence (B) are produced. According to Chinese Standard these are for example N45 and N52 with high remanence (B) and magnetic materials with the additional designations H/SH/UH and EH for high coercive field strength (H) and consequently also a higher operating temperature.
IIBS Magnet manufactures NdFeB magnets according to customers’ dimensions from the German raw material of the company Vacuumschmelze in Hanau. These are particularly high-quality magnetic materials with a worldwide licence of the Japanese patent holder and licensor Hitachi/Neomax. Thus, magnets made from these magnetic materials, may also be installed in equipment and machines which are exported to the USA and Canada. In America there is still a patent until 2014 so that only licensed NdFeB magnets may be installed in imported equipment which thus correspond to the valid Patents Acts.

Rare Earths – Delivery Situation and Price Development

The following reasons are given for the tremendous price increases:

1)The global monopoly of more than 95 % held by China was achieved by long-term rock-bottom prices. Thus all the other mines in the world could not produce profitably anymore and were gradually closed. Thus the monopoly was achieved, and the low price period was over.

2)Close-down of several mines by the Chinese government and concentration on few mines and processing factories for the expensive separation of the 17 elements, which is also harmful to the climate, under government control.

3)The export restrictions induced by the government are meant to preserve the diminishing resources of the rare earths and to cause a further processing by investors in China.

4)China’s high own requirements for rare earths, for example neodymium magnets for electric motors in cars or generators for wind power plants, because of the prospering Chinese economy (the world’s leading exporter). China itself needs the resources which are not infinite, such as the rare earths, for building up the high-tech industry.

5)The significant increase in demand for the rare earths due to the technical progress for electric motors, generators for wind energy and also for the electronics, such as mobile phones, monitors, sensors etc.

6)Considerable effort for the environmentally friendly separation of the elements from the extracted rare earths.

According to press information from the Chinese Department of Commerce the export of rare earths has decreased by 21.6 % in May 2011. However, at the same time the value of the rare earths exported in May 2011 has risen by a whopping 242 %. This is the typical result of a monopoly situation.

The Mount Pass Mine of the Molycorp. in the USA was re-opened. This mine had been shut down because of the Chinese low-price policy. Due to the price increase Molycorporation works profitably again and already delivers on a smaller scale.

The Mount Weld Mine of the company Lynas, Australia, which is ready to extract, is facing problems with the treatment factory in Malaysia. They will be able to handle these problems and will be ready to deliver within a reasonable period until 2014. However, the price situation will not change fundamentally because a production at the previous Chinese low prices is impossible in western countries.

All other explorations in Canada, Russia, Mongolia etc. are still in the drilling and reconnaissance phase and will change the world market supply only in more than 6 years.

In any case the rare earths are not that rare after all, as only 30 % of the estimated world’s entire resources come from China.

Many western industries will have to change their arrangements as the high prices of the rare earths result in price increases of the final products.