Toyota Latest Manufacturer to Identify Rare Earth Metal Product Substitutes

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Every six months or so, I am reminded of this phrase which I love, “nothing kills high prices like high prices.” And so it goes that engineers and sourcing organizations everywhere begin to contemplate and, in some cases, develop alternative materials.

We have seen examples of this in stainless steels, whereby many organizations made the switch from costly nickel-based alloys to non-nickel based alloys. Toyota made an announcement last week that it has moved to an “advanced stage” in the R&D process toward using an induction-type electric motor that will ultimately replace the need for two key rare earth metals – neodymium and dysprosium.

Of course, these announcements tend to scare the investment world (especially those that have bet big on rare earths), but some rare earth metals experts, such as Gareth Hatch (who will also lead the Rare Earth Metal afternoon break-out session at our conference, Commodity Edge: Sourcing Intelligence for the New Normal) remain skeptical about some of these types of “breakthrough research” announcements. Gareth’s recent comments on a press release issued by Northeastern University announcing the development of a new magnetic material demonstrate the depth of analysis one must consider to verify the findings.

But when Toyota makes a similar announcement, the market might want to listen. We caught up with Gareth to hear what he had to say about some of these recent announcements:

MetalMiner: You seemed somewhat skeptical about the Northeastern University press release involving the discovery of a new magnetic material. What do you make of Toyota’s announcement involving the development of a new induction-type electric motor?

Gareth Hatch: It’s just not particularly newsworthy. Induction motors (that do not use permanent magnets) are nothing new and have been around since the 19th century. If permanent-magnet prices continue to decrease as they have been doing from their peak in the summer of 2011, then we’ll stop seeing these types of stories. Costs aside, motor designers generally prefer to use permanent-magnet based (PM) motors because they can generate greater torque densities than their induction counterparts. This means that using a PM motor means less weight per unit torque generated. That said, there are some things you can do with an induction motor that you can’t with a PM motor, but they’re less relevant to everyday vehicles than they would be, say, for a sports car like those produced by Tesla Motors (a company which, incidentally, is named after the inventor of the first induction motor).

MM: When a company like Toyota states they have reached an “advanced stage” of research, when do you believe the technology will make its way into commercial production?

GH: I have no idea. What I can tell you is that the design cycle for the automotive industry is longer than many people realize — vehicles being designed now might not hit the showrooms for at least another 4-5 years.

MM: Where do you see the biggest in-roads being made in terms of product substitution for rare earth metals (e.g. which rare earth metals are R&D teams trying to identify substitutes for?)

GH: Well, we saw some reduction in demand in 2011 for simple rare-earth based compounds, mainly using lanthanum and cerium. Whether that can all be attributed to a permanent replacement of these compounds remains to be seen. There is a lot of activity, much of it funded by the US government, to develop alternative permanent magnet materials that do not contain rare earths at all (such as neodymium, praseodymium and dysprosium), or rare earths not deemed to be critical (such as cerium), just like the aforementioned manganese-gallium project at Northeastern. The thing is, these are long shots. They are interesting from the scientific point of view, but history shows that very few such projects are successful. That doesn’t mean we shouldn’t try, of course, but they’re not going to get us out of the near-term shortages of critical rare earths that are likely.

Gareth will be leading the Rare Earth Metals breakout session at our Commodity Edge: Sourcing Intelligence for the New Normal event:

–Lisa Reisman

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