Rare earth metals and transition metals are alloyed and magnetized by a magnetic field to obtain rare earth permanent magnet materials. These magnetic materials have been widely used in automobiles, household appliances, meters, mobile phones and other devices.
Among rare earth permanent magnet materials, neodymium iron boron materials have the best magnetic properties and can be used for electromagnetic signal conversion. The use of neodymium iron boron rare earth permanent magnet materials in the development of various motors can not only achieve good performance and energy saving effects, but also significantly reduce the size of the motor.
China is the world’s largest consumer of rare earths, with rare earth mining, export, and imports all ranking first in the world in 2019. China’s rare earth materials companies have good resource reserves. However, the patent barriers for producing rare earth materials have become a problem faced by many Chinese companies in expanding their overseas business.
As one of China’s rare earth material top companies, Anhui Dadixiong New Material (Earth Panda Advance Magnetic Material) main product is sintered NdFeB permanent magnet material. Compared with traditional permanent magnet materials, sintered NdFeB permanent magnet materials have the best development prospects. According to different manufacturing processes, NdFeB permanent magnet materials production can be divided into three categories: sintering, bonding and hot pressing. The mechanical properties of bonded NdFeB and hot-pressed NdFeB permanent magnets are weak, the amount produced is small, and the market share is less than 10%. The sintered NdFeB material currently has the highest output and the widest application. Its market share has reached 90%, covering many fields such as the automotive industry, industrial motors, consumer electronics, clean energy, aerospace and other. Among them, the application of high-performance products in automobiles is the most common. The total demand by application of traditional automobiles and new energy automobiles exceeds 50%.
The sintered NdFeB magnetic material industry is very developed in China.
At the end of the 20th century, global production capacity of sintered NdFeB magnetic materials was concentrated in Japan, Europe and the United States. After the formulation of China’s rare earth separation technology, the level of technological advancement of the rare earth industry ranks first in the world. The global output of rare earth smelting and separation in 2018 was about 146,000 tons, of which China’s output was 125,000 tons, accounting for about 86%. With the advantages of rare earth resources and cost, the production capacity of NdFeB magnetic materials began to shift to China.
However, domestic production of high-performance NdFeB and its global market share still have room for improvement. In 2018, the global output of NdFeB materials was 185,000 tons, of which 48,000 tons were high-performance products; China’s NdFeB output was 157,000 tons, and the output of high-performance products was 23,000 tons. From the perspective of proportion, China’s NdFeB output is close to 85% of the world’s total, but the output of high-performance products in the global market share is less than 50%, and its production capacity potential has not yet been fully realized.
In addition, the industrial policy of energy saving and emission reduction will promote the continued growth of the market demand for sintered NdFeB permanent magnet materials.
In recent years, under the guidance of China’s industrial policy, inefficient motors, transformers, fans, pumps, compressors and other energy-consuming equipment will be gradually eliminated. NdFeB permanent magnet motor has the characteristics of “high efficiency and energy saving”. In terms of energy saving, the efficiency of NdFeB permanent magnet motor is 10%-15% higher than that of ordinary motor. In the future, it will have a lot of room for improvement in the proportion of high-end applications in new energy vehicles, EPS, industrial energy-saving motors, energy-saving home appliances, energy-saving elevators, and clean energy.
At present, the global NdFeB permanent magnet materials industry is concentrated in China and Japan. The market prospect of sintered NdFeB permanent magnet materials are good, and more than 160 Chinese enterprises have joined the market. What competitive landscape do they face? Since 2016, Earth Panda Advance Magnetic Material has formed a sales pattern that emphasizes both domestic and foreign sales, and the proportion of overseas income has remained stable at over 40%, with North America accounting for the largest proportion. Earth Panda Advance Magnetic Material’s products have been recognized by well-known overseas companies. Customers include Nexteer, Black & Decker, ZF, Panasonic, Nidec, Makita and others.
Earth Panda Advance Magnetic Material can expand overseas business on a large scale, mainly because it has obtained Hitachi Metals patent authorization. This “patent authorization” is a “wall” for companies to enter the international market, separating the low-end and high-end markets.
At present, Hitachi Metals has more patents on sintered NdFeB in the United States, Europe and Southeast Asia, and has formed higher patent barriers in the global market. If the authorization of Hitachi Metals is not obtained, the products which are exported to Europe, America, Japan, South Korea and Southeast Asia and other patent protected areas are at risk of infringement.
In 2012, Hitachi submitted to the US International Trade Commission in accordance with the relevant provisions of Section 337 of the US Customs Tariff Act of 1930. Due to patent infringement, it launched investigations to prevent products from entering the United States.
It wasn’t until 2013 that
Earth Panda Advance Magnetic Material and Hitachi Metals signed the “Reconciliation Agreement” to pay Hitachi Metals a one-time settlement fee and patent royalty, and obtained its patent authorization.
So far, of the more than 160 NdFeB manufacturers in China, Hitachi Metal has only granted patents to 8. Unauthorized enterprises have difficulties in expanding international trade.
As the international patent authorization has brought a barrier to market entry, domestic NdFeB material companies have undergone significant differentiation. When the application of magnetic materials such as automotive EPS, high-performance motors, and consumer electronics emerged, the first eight authorized companies such as
Earth Panda Advance Magnetic Material successfully seized the opportunity to develop and formed a first-mover advantage. After years of customer accumulation, they have secured a market share globally.
Unauthorized enterprise products are mainly based on low-end applications, with overcapacity in the market and fierce competition. And customers such as automobiles and motors have long lead-in periods, and it is not easy for them to catch up with leading international manufacturers.
Although there are many domestic manufacturers of NdFeB permanent magnet materials, there are limited market participants who can compete with
Earth Panda Advance Magnetic Material . Its main product, high-performance sintered NdFeB permanent magnet materials market, has a balanced supply and demand.
Earth Panda Advance Magnetic Material recognizes the importance of patents to the neodymium iron boron material industry and is committed to developing independent patented technologies. In 2015, the company became the only commercial supporter of the national magnetic materials laboratory and launched R&D projects in cooperation with universities such as Hefei University of Technology.
In terms of technical patents, Earth Panda Advance Magnetic Material’s high temperature resistant 250℃ high-performance sintered NdFeB magnet fills the gap of this process for domestic enterprises and reaches the international standards level. Thermal stability is one of the important indicators to measure the service characteristics of sintered NdFeB magnets, and the maximum service temperature of similar domestic products is generally below 200 ℃, which is far from the advanced technology level from outside of China.
In terms of environmental protection patents,
Earth Panda Advance Magnetic Material adopted the self-developed “mechanical rapid removal of waste magnet surface coating” technology and established a remanufacturing technology system for waste sintered NdFeB magnets, which is conducive to recycling non-renewable rare earth resources.
After breaking through the patent barrier, can Earth Panda maintain a good momentum of continuous growth in the future?
In fact, many members of the same eight companies that have been granted Hitachi Metals patent licenses with Earth Panda have already experienced a decline in profitability. From 2017 to 2019, the net interest rate of Zhongke Sanhuan slipped from 8.56% to 6.08%; the net profit rate of Ningbo Yunsheng fell from 22.62% to 2.3%; the net profit margin of Jinli permanent magnet slipped from 15.24% to 9.23%.
For the Earth Panda, precautions have become an inevitable choice.
Since the largest application field of high-performance sintered NdFeB permanent magnetic materials is the traditional automotive industry, the decline in profitability of manufacturers in the industry may be related to the slowdown in the growth rate of the automotive market.
After 2018, the domestic auto market has entered an inflection point, and both production and sales have declined. In 2019, the growth rate of the automotive market continued to slow, falling more than 9% year-on-year.
On the contrary, the new energy vehicle market is booming. In 2018, China’s sales of new energy vehicles reached 1.256 million units, a year-on-year increase of 61.7%; sales in the first half of 2019 were 627 thousand units, a year-on-year increase of 53.4%. It is expected that by 2025, new energy vehicles will account for more than 20% of automobile production and sales.
The “Global Automotive Trends Report” mentioned that the future of the automotive industry will change around five major trends: electrification, autonomous driving, sharing, networking, and rapid updates. Compared with traditional fuel vehicles, the structure of new energy vehicles is simpler, and there is more room for innovation in the overall vehicle architecture, so it is the best carrier for autonomous driving and connected vehicle technology.
High-performance sintered NdFeB magnets are the material of choice for new energy vehicle drive motors. Tesla Model 3 has all used rare earth permanent magnet motors. In 2018, the demand for new energy vehicles for high-performance NdFeB magnets was close to 6,000 tons. The active layout of mainstream car makers at home and abroad will inevitably bring new demand for motors, and the high-performance sintered NdFeB market is expected to usher in a rapid growth period.
Earth Panda’s plan ahead is to focus on new energy vehicles. They are planning to develop an annual output of 1500 tons of high-performance sintered NdFeB magnets for automotive motors. The company will invest 223 million yuan(31.5 million USD) to meet the future needs of the new energy automotive market.