End of rare earth patent expected to boost exports
September 4, 2014 Category Automotive Metals & Minerals, Minerals
Some Chinese producers of rare-earth magnets are seeking to use the expiry of a key patent held by Hitachi Metals to expand exports of the micro magnets used in products from motors to smartphones. The expiry of a 17-year-old patent that defines the structure of such magnets paves the way for previously blocked Chinese producers to sell to U.S. customers, Shenyang General Magnetic Chairman Sun Baoyu said. Shenyang General has formed an alliance with six other Chinese producers to promote their products and fight Hitachi over other patents, which the Japanese company says largely prevent rivals from making magnets. The end of the patent will pit the seven producers in the alliance and potentially others who try to tap into the market against Hitachi and eight Chinese companies that have paid for the right to make and ship the magnet. An increase in exporters of the magnets could potentially cut prices of the product used in Apple’s iPhones and Toyota hybrid-electric cars. Hitachi holds more than 600 patents for rare-earth magnets globally, some of which it acquired after taking over Sumitomo Special Metals in the 2000s. Chinese magnet makers are struggling with overcapacity after an earlier price boom spurred a flood of investments. Japanese companies hold most of the world’s rare-earth magnet patents, while China produced about 90% of the global supply. China exported 18,800 tons of magnets last year.
The government has approved two major rare earth producers to become conglomerates by the end of this year in order to further consolidate the sector, combat smuggling and alleviate overcapacity in production. Xiamen Tungsten Co and Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co have been approved by the Ministry of Industry and Information Technology (MIIT) to form the two rare earth groups. Xiamen Tungsten will integrate rare earth mining, separating and manufacturing within Fujian province in the south, excluding what is owned by China Minmetals Corp by the end of 2014. Baotou Steel will set up China North Rare Earth High Tech Co, consolidating rare earth mining, separating and processing within the Inner Mongolia autonomous region and Gansu Rare Earth Group Co in the north. These two companies are among six groups encouraged to consolidate earlier this year. The other four groups are: China Minmetals Corp, Aluminum Corp of China, Ganzhou Rare Earth Group Co and China National Nonferrous Metals Industry Guangzhou Corp. Chinalco has received written approval from MIIT to use subsidiary China Rare Metals and Rare Earth as a foundation to form a large-scale rare earth firm that will consolidate mining and smelting rivals in Guangxi, Jiangsu, Shandong and Sichuan.
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