Hostilities between China and Japan heat up in the American Courtroom over Patents
Posted on October 27, 2014 by Jack Lifton
...China’s rare earth permanent magnet manufacturing industry, which accounts for 80% or more of the world’s annual production of rare earth permanent magnets is in an existential crisis. There are several reasons for this including:
China’s economy,
Overcapacity,
Reorganization of their supply base, and
Raw material uncertainty...
The consumer products we take for granted today as relatively inexpensive and small enough to be non-obtrusive exist courtesy of the magnetic and electronic properties of just a few of the rare earths principally neodymium, praseodymium, samarium, europium, terbium, and dysprosium. If any rare earths are critical in 2014 and the near future it is these six.
The Chinese REPM manufacturer’s alliance is not a marketing group; it has specifically been formed to clear the way for Chinese owned and operated REPM manufacturers to set up marketing operations outside of China, primarily in the USA and Europe, and go after high volume REPM customers with their own patented and proprietary REPM technology. If and when this goal is achieved-and it is going the way of the Chinese litigants in the US Patent Court-then the alliance members plan to immediately set up marketing operations in the American market and then, if and only if, domestic supplies of their critical rare earths, particularly of the heavy rare earths dysprosium and terbium are available outside of China, to build manufacturing facilities in the USA using domestic American raw materials.
This program applies to Europe, an even larger market for REPMs than the USA, also.
Note well that such manufacturing outside of China using non-Chinese materials will not interfere with, it will in fact accelerate, the Chinese focus on utilizing their domestic raw materials increasingly for manufacturing for domestic consumption.
Such overseas expansion would reduce the pressure on the overcapacities in the Chinese domestic REPM manufacturing market and would create a flow of capital (in profits) into China at a time when such flows from exports are to be reduced.
Of course this business model by Chinese REPM manufacturers does not impact the non-existent US REPM manufacturing industry. It is however a direct threat to the Japanese REPM manufacturing industry, which is the dominant player in the USA today. The same is true on Europe although Europe has a fair size REPM manufacturing industry, but the influence of the “Hitachi patents” is much less in Europe today as the principal ones have already or are soon to expire.
America’s, Europe’s, and Australia’s heavy rare earth themed “juniors” stand to benefit from a victory by the Chinese REPM manufacturing industry in its contest with the Japanese, because it is much more likely that the mature Chinese REPM industry will enter the US market at price points with which domestic manufacturers dependent as they are on Chinese raw materials at “export prices” cannot compete.
Chinese investors who are well aware of the changes in their government’s attitude in this area are already openly investing in juniors with significant heavy rare earths such as Australia’s Northern Minerals Limited (ASX: NTU) and Greenland Minerals. North American and European investors and even large Global1000 end-users profess to be well aware of the problems of rare earth supply yet they are reluctant to capitalize the solution to the problem through mine development. Chinese investors have no such problem, because they have a home market ready to accept all of the SEGs and HREEs and, I suspect, the neodymium and praseodymium that can be produced outside of China in profitable mixes of elements.
I know that North American and European technology allied with North American, European, and Australian capital could turn both America and Europe into producers of rare earth alloying elements and rare earth magnet alloys to rival China in total volume by 2020.
I in fact think this is exactly what is going to happen, but It is up to the institutional investors of North America and Europe whether or not this new volume of material flows to Asia bringing raw materials and profits to Chinese investors or ignites a revival of high tech rare earth based manufacturing in North America and Europe of finished goods.
China is determined that ultimately North American and European high tech that is not manufactured in China should not be available competitively to the Chinese domestic market. They can make sure of this now simply by buying control of the rare earth juniors named above. They have already begun with Greenland Minerals and have a strong position in Northern Minerals.
But we have a short breather; China first target for elimination from the global market for manufacturing high tech devices enabled by the electromagnetic properties of the rare earths is Japan.
investorintel.com/rare-earth-intel/...rican-courtroom-patents/
Die Chinesen versuchen das durch Patente, teilweise laufen wichtige aus, geschützte Japanische Hitachi Monopol auf den Massenmarkt von Permanentamagneten durch eigene Patente zu unterlaufen. Sollten sie in den USA und Europa damit durchkommen, wollen sie dort eine eigene Produktion aufbauen, die auf ausserhalb Chinas geförderte SE basiert. Desshalb beteiligen sie sich an SE Explorern.