Friday, June 3, 2011

Substitutes Limit Monopoly Power

China, the dominant supplier of rare earth metals used in electric motors, is limiting exports and driving up prices (see Economist article).
Over the past year the price of neodymium has quadrupled as electric motors that use permanent magnets instead of electromagnetic windings have gained even wider acceptance.

Some auto companies, including Toyota, have gone back to motor windings rather than be dependent on a single supply source. Is it enough to limit the pricing power of Chinese rare-earth mines?

Hat tip Mark Perry

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