The Update on The Magnet Industry 2025/03

Highlight of the Month   ◎ Jerry Yang, COO

As we enter 2025, the beginning of each year, due to the Lunar New Year, marks a quieter period for both the permanent magnet industry and the rare earth mining industry, a time when everyone can rest. The magnet industry experiences a kind of 'reboot,' affecting both machinery and personnel. This is particularly true as China's economic slowdown intensifies, exacerbating the annual post-Lunar New Year labor shortage. The magnet industry's production capacity and product quality often don't stabilize until March.

However, President Donald Trump's re-election makes this period anything but peaceful. After experiencing his first term, countries have a general understanding of his transactional diplomacy style and, during these two months, they find themselves unprepared for his frequent moves. In this context, sociological discussions of contemporary risk offer deeper insights into the current situation. Over the next few months, I will focus on this concept to analyze the dynamics of the permanent magnet industry in 2025.

In the 1980s, German sociologist Ulrich Beck introduced the concept of the "Risk Society," distinguishing modern risks from the natural risks faced by pre-modern humanity. Under the advanced development of industry and technology, humanity has come to dominate most of the natural resources that can be utilized. In this man-made world, nature is replaced, and natural risks are transformed into manufactured risks.Under manufactured risks, humanity attempts to institutionalize risks through regulations, science, and democracy, trying to control these manufactured risks as we control natural ones. However, the flip side of this is the institutionalized risks that arise when the system fails to function properly. Moreover, modern risks are no longer confined to specific groups or regions but spread all over the world through the channels of globalization.

Technological progress inevitably leads to new types of risks. For example, oil has driven large-scale industry but also brought about the greenhouse effect and extreme weather. Green energy technologies, which arose to mitigate the greenhouse effect, have led to the development of electric planes, with Afran Electrical & Power obtaining the world's first certification for a civil aircraft electric engine, as well as the rapidly growing electric vehicle industry and recently successful test flights of flying cars. At the core of green energy technology are motors and generators, which use a significant amount of rare earth magnets as parts. Behind the prosperity of these technologies, however, the extraction of rare earth minerals causes severe environmental damage and has entangled global tech powers in competitive relations. Ultimately, risks are no longer confined to ecological issues but extend to economics, territory, and political systems.

From the process of USA Rare Earth and MP Materials refining heavy rare earth minerals and producing commercial neodymium magnets in Texas, we continuously see the United States' efforts to break free from China’s overwhelming dominance in rare earth minerals and permanent magnet production. This can be seen as the U.S. trying to institutionalize risks in the competition for technological development. Behind this, it may further symbolize democratic states' risk management efforts to resist internal erosion.

Unlike traditional international politics, in Trump's transactional diplomatic logic, any issue is negotiable, including democratic values and the definition of aggressors. In this context, the peace between Ukraine and Russia has been put on the negotiation table. The U.S. hopes to gain economic benefits from military aid to Ukraine by proposing a mineral agreement.Ukraine holds some of the world’s top mineral resources, including rare earth minerals closely related to military and technological development. The mineral agreement proposed by the U.S., as mentioned earlier, represents a risk management approach to the development of its own national interests. However, the agreement, originally scheduled for signing on February 28, was temporarily derailed due to a verbal clash between Trump and Zelenskyy at the White House. The U.S., or rather President Trump, attempts to present itself as a mediator with an opportunistic agenda, wrapping its "Make America Great Again" (MAGA) narrative in the guise of risk institutionalization, but this has instead become an institutionalized risk, eroding Europe’s trust in the U.S. and its shared values.

In contrast, China, in order to strengthen its dominant position in domestic rare earth mining and permanent magnet production, continues the implementation of the "Rare Earth Management Regulations" that started in 2024 and is preparing to introduce the "Total Volume Control Management Measures for Rare Earth Mining and Smelting Separation" and the "Rare Earth Product Information Traceability Management Measures." These can be seen as a form of risk institutionalization aimed at increasing negotiation leverage against the U.S. and its allies. Similarly, China’s strengthened risk institutionalization contributes to the global intensification of institutionalized risks. As a means of great power competition, the trade war will result in the whole world sharing the economic, environmental, and regional peace risks inherent within it.

Our top five picks this month cover the latest global trends in magnetic materials.

#US-Ukraine minerals deal #RareEarthRegulations #CriticalMinerals #USChinaTrade #ElectricVehicles #AerospaceTechnology

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