Why Texas Really Matters

Assumption: the Rare Earth Magnet Manufacturing Production TaxCredit Act gets passed.

My question: can Lynas be a viable materials source for globally competitive US magnets production and can anyone else do it in the medium term?

My Answers: Yes, No.

The act in question is working its way through the US legislature and any updates on its current progress would be welcome. https://www.congress.gov/bill/118th-congress/house-bill/2849

Its co-sponsors are dem/rep and I believe it has a very good chance.

It proposes a US$20/kg subsidy for US made magnets with the materials sourced from ‘friendly’ nations and US$30/kg for all-US mine to magnet. Only the $20 subsidy is relevant here.

It’s a hefty subsidy, over 50%. Magnet blank prices are currently US$25 to $54/kg (for the non-Ce variations) with about a $35/kg average. https://www.metal.com/price/Rare%20Earth/Rare-Earth-Magnets

Who has realistic access anytime soon? Molycorp don’t while their concentrate is processed in China. If they get domestic separation going then OK, but I doubt that’s anytime soon. (Lynas took years to achieve volume and quality.) The only ROW source of Dy/Tb for high performance magnets will be the Lynas Texas facility so they will own the high end US magnet market.

Who can make the magnets? The former Hitachi Metals IP is now owned by US private equity and I believe Japanese companies such as Shin Etsu are having a serious look at accessing the subsidy by setting up there. They may not be able to match Chinese COP in the US of course but that massive subsidy….

So where does all that leave Lynas?
By weight NdFeB magnets are about 1/3 NdPr.At a US$60/kg NdPr cost that’s about the subsidy for using Lynas material (as opposed to Chinese).
In other words (at these NdPr prices) they get their NdPr essentially for free If it’s from Lynas.

There will likely be extra costs for US magnet manufacturers of course. But these magnet producers have proven highly successful in Japan using Lynas NdPr. It’s a slam dunk for them in the US if the Rare Earth Magnet Manufacturing Production Tax Credit Act gets passed.

And Lynas could charge a healthy premium to Chinese prices for access to their subsidy compliant materials (NdPr and DyTb).