I was surprised to find out how many types of magnets are out there. Can you walk us through their relevance in the green transition?
The applications are manifold, but the most important aspect is that by using specific materials and magnet compositions we can improve the efficiency of EV motors, wind turbines, and other devices. This is a good path for the world to take, optimizing existing concepts and aiming for better results with less energy.
Of course, there are other examples; magnets are used in sensors to optimize the efficiency of steering wheels, determining when the electric motor is required and when it is not. Another example is the Dyson hand dryer, which takes only a few seconds to complete the task because it uses heat generated directly by the motor, the most efficient method. The list continues with various vacuum pump and high speed motor applications, among others.
Supply chain bottlenecks, particularly for critical rare earths, have recently made headlines. How are you dealing with this in your production?
This was not a problem for us because we have been working closely with Chinese manufacturers since the early 1990s. One significant advantage that China has is that raw materials are, in some ways, right next to their homes. We developed close relationships with them over the last three decades while also creating a market for these products in Europe - a win-win situation. We never had a problem with Covid and the unreliable delivery timelines that followed because we had safety stock on hand and a very good global network that included suppliers and shipping agents.
I am confident that supply will remain stable. One question mark, however, has to do with the way in which the Chinese government will handle rare earths going forward. There are discussions about forming a centralized group to handle mining and product separation which could lead to a repeat of the 2011 situation, when political tensions between Japan and China - fueled by market speculation - resulted in additional taxes and massive price increases. Nonetheless, I remain optimistic because, while China is a very large market, it still makes sense for them to export their products globally.
You also have manufacturing in Malaysia...
Indeed, we produce injection-moulded magnets, which is a permanent magnet powder mixed with plastics. At this stage we are getting the finished compound from a Japanese supplier, but intend to produce our own compound in the near future; it will take us one-two years to get there. The plan for now is to source the neodymium powder from China, because they have very good manufacturers in this area and also because there are not too many producers of this sort in other parts of the world.
Is public policy supportive of this sector, given the importance of magnets in our future?
Different regions take different approaches. The United States recognized that this is an important topic for them, whether for defense or space exploration, so when companies like MP Materials appeared asking for money, the government demonstrated that it is willing to spend. What I've seen in the EU is a tendency to talk about it, crunch the numbers, and determine how much capital is required, but leave investment to the private sector.
Everybody recognizes that Europe needs the sector to grow, but price still rules the market; as long as this is the case, we will have a difficult time changing the world.
Bomatec is one of the companies that has led this sector in Europe for over three decades. What brought you to this point?
Perhaps it was luck and hard work, or perhaps it was simply being in the right place at the right time. Chinese manufacturers had a bad reputation, which we began to change by using our own labs for material and environmental testing to demonstrate that the suppliers we use meet the standards expected by the European market. This had a significant positive impact on magnet sales, particularly between 2004 and 2015, because the quality was reliable and the price was competitive.
We did face challenges because our customers had to deal with inspections and supplier validation, but we made it easier for them by placing some of our staff in China. They are ready to assist if anything comes up. This is something we did very well I think, providing assistance and making it easy for our customers to go about their business.
We are in a very particular moment in time, with big challenges on the table but also plenty of opportunity promised by a booming rare earths industry. All things considered, what is a final message you want to leave our audience with?
There is no way to tell what the future will bring, things are changing quickly and often. My approach is to take things as they are and make the best out of them - I know that our strategy for the coming year can change in two weeks. The only way to go about it is to keep a cool head and not worry too much about what will happen next.
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