Another wake-up call for the rare earth sector. Get moving, guys, because the world is not standing still.
The big news today – there’s a brief news clip already on RareMetalBlog – is that Hitachi has developed an energy-efficient, midsize industrial motor that does not contain any rare earths. The 11kw motor, the product of four years’ work, will be used for air-blowers in factories and buildings as well as in pumps. It will be commercially available by fiscal 2014 – which starts 12 months from now (on April 2013).
Toyota and other Japanese companies are working on other non-REE motor projects. More breakthroughs can be expected – Toyota is hard at work in this space and Mitsubishi Electric Corp and Nidec Corp have combined to commercialize rare-earth-free hybrid vehicle motors. Hitachi competes with Toshiba Corp and Mitsubishi Electric for the top spot in the domestic market for midsize industrial motors. It controls nearly 10 per cent of Japan’s industrial motor market.
In other words, the “reduce, recycle and replace” strategy being adopted by end-users is still in force. It won’t just be the Japanese: expect the South Koreans to be taking a great interest in these developments. South Korea relies heavily on rare earth supplies from China and there is talk in Seoul that the Koreans will by using free trade treaty talks to press for more generous access to Chinese rare earth supplies. What about the Taiwanese?
After all, it was the Chinese restricting exports and then jacking up prices that has brought about this replacement surge. The Chinese are not going to ease those restrictions. Over to you in the Western REE firms.
Every REE explorer/developer is basing their business plans on existing forecasts of demand. If this substitution move gathers pace, then the market in 2016 or 2020 may be not what they’re expecting. Western players must get into rare earth production as quickly as possible to reassure end-users that adequate and reasonably priced supplies will be available.
As the Nikkei report explains, Hitachi’s new motor uses an iron core based on a proprietary amorphous metal. It achieves comparable performance at a sharply lower cost, considering prices of rare-earth metals have skyrocketed since the Chinese government restricted exports.