What is Neodymium

Famous for being a key material in the strongest rare earth magnets currently available, neodymium is certainly an element that rare earths investors will hope to be familiar with.

Neodymium-iron-boron NbFeB magnets are used in a range of modern technological applications. Below, the Investing News Network takes a look at what neodymium is, how it’s used and how supply risks for the metal are affecting end users in the market.

Firstly, a little background

Neodymium was discovered in 1885 by Austrian chemist Carl Auer von Welsbach, though its discovery brought about some controversy — the metal cannot be found naturally in its metallic form, and must be separated from didymium.

As the Royal Society of Chemistry notes, that caused skepticism among many chemists as to whether it was a unique metal or not.

However, it wasn’t long before neodymium was given its rightful recognition as an element in its own right. The metal gets its name from the Greek “neos didymos,” which means “new twin.”

Neodymium itself is quite common.Acturally it is twice as common as lead and about half as common ascopper in the earth’s crust. It is typically extracted from monazite and bastnasite ores, but it also a by-product of nuclear fission.

Neodymium applications

As mentioned above, neodymium has incredibly strong magnetic properties, and is used to create the strongest rare earth magnets available by weight and volume. Praseodymium, another rare earth element, is also often found in such magnets, while dysprosium is added to improve the functionality of neodymium magnets at higher temperatures

Neodymium-iron-boron magnets have revolutionized many mainstays of modern technology, such as cell phones and computers. Furthermore, due to how powerful the magnet is even when produced in small sizes, neodymium has made the miniaturization of many electronics possible, according to the Royal Society of Chemistry

To take a few examples, Apex Magnets notes that neodymium magnets cause the tiny vibrations in mobile devices when a ringer is silenced, and it is only because of neodymium’s strong magnetic properties that an MRI scanner can produce an accurate view of the inside of a human body without having to use radiation. The magnets are also used for graphics in modern TVs, as they greatly improve picture quality by accurately directing electrons to the screen in their proper order for maximum clarity and enhanced color.

Additionally, neodymium is a key component in wind turbines, which utilize neodymium magnets to assist in enhancing turbine power and generating electricity. The metal is most commonly found in direct-drive wind turbines. These function at lower speeds, allowing wind farms to create more electricity than traditional wind turbines, and in turn, to make a greater profit.

Essentially, since neodymium doesn’t weigh much (even though it generates a significant amount of force) there are fewer parts involved in the overall design, making turbines more efficient energyproducers.

As demanding for alternative energy continues to rise, demanding for neodymium is set to drastically increase as well.

Supplying risks

Chinese production has accounted for the vast majority of rare earths supply in recent years — about 95 percent, according to the USGS. For a time, China restricted the supply of rare earth materials through rare earth export quotas, a move that caused concern in the rest of the world, as demand and pricing continued to rise.

However, in 2014, the World Trade Organization (WTO) ruled against the quotas, stating that the rules were in violation of China’s role as a WTO member. China’s Ministry of Commerce announced at the end of December 2015 that the country would scrap the limits on exports.

While this development was no doubt promising to users outside of China, many market watchers pointed out that the change in regulations may not address the problem fully. The country changed its internal tax structure for rare earths in 2015, and still has internal rare earth mine production quotas. Furthermore, the country removed its export tariffs on rare earths and other metals, which put pressure on rare earth prices in the short term. Still, there have been reports that Chinese rare earth miners are now operating at a loss, so the industry may no longer be as invincible as previously believed.

Outside of China, there are a number of mining companies focused on developing rare earths deposits and eventually producing rare earths — including neodymium. Molycorp (OTCMKTS:MCPIQ), the only US rare earths producer, went bankrupt and put its operations on care and maintenance mode last year. However, the company’s Australian counterpart Lynas Corporation (ASX:LYC) is still in the game, as are a number of juniors and developers. Examples include Medallion Resources(TSXV:MDL,OTCQX:MLLOF) and Ucore Rare Metals (TSXV:UCU).

The upshot

Surely, while rare earths may sometimes be grouped together, neodymium stands out as an especially important material among the rest. Investors may want to keep an eye out for mention of the element when following the rare earths market.

This is an updated version of an article first published on Rare Earth Investing News on March 3, 2015.