Toyota Taking Steps To Reduce Dependence On China For Rare Earth Elements

Provideo Financial reports on rare earth elements and China's role in forcing innovation and exploration.

China made news by threatening to limit the supply of neodymium to world markets. The rare earth element used to make high powered magnets crucial to modern electronics is in demand more than ever, and China is now in control of more than 95% of the world's production. The automotive industry accounts for more than 40% of neodymium consumption, and Toyota is the largest consumer of rare earth elements from that industry. A Toyota Prius is said to contain 1 kilogram of neodymium, and the company has announce that they are developing new motor technologies that will not depend on permanent magnets.

In December China announced a 67% increase on the export tariff on the metal, and is limiting its exports this year. The United States, Australia, India, Brazil, Argentina, Malaysia and Estonia all sit on reserves of rare earth minerals but before now have lacked the know how or incentive to really pursue mining and refinement. Though companies like Toyota are trying to reduce their dependence on the metals, it is unlikely that demand will decline. Toyota's leap towards the development of induction motors suitable for use in hybrid and electric vehicles are positive steps forward for them, but will not likely reduce the industry's dependence on rare earth minerals.

Analysts at Provideo Financial believe that the exploration and refinement of rare earth minerals outside of China will be a hot sector in 2011 and moving forward. "Rare earth minerals will continue to be a hot topic. Even if Toyota's new motor reduces their dependence on neodymium the demand for the metal won't waver. There are a handful of companies in this sector that we are watching right now that will likely make headway over the next year, and I expect significant sector growth outside of China in 2011." - Arnold Brouwer, Provideo Financial

The demand for rare earth minerals isn't decreasing, and it is far more likely that we will continue to increase our rate of consumption as we have over the past 10 years. With China in complete control of the market, companies that are producing the metals in other locations will do very well. With exploration and construction of refinement facilities underway in more than a half dozen other countries look for a much more international presence in the rare earth mineral sector by year's end.

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Company Name: Provideo Financial
Issued By: Allison Williams
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by Allison Williams (few years ago!)

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