New UK Magnet Factory for EVs Should Copy Chinese Playbook

According to a British government survey report released on Friday November 5th, the UK can resume the production of high-powered magnets needed for the development of electric vehicles, but to be feasible, the business model should follow China's centralization strategy.

According to Reuters, the report was written by Less Common Metals (LCM) of the UK, which is one of the only companies outside of China that can transforms rare earth raw materials into special compounds needed for the production of permanent magnets.

The report said that if a new magnet factory is established, it will face challenges competing with China, which produces 90% of the world's rare earth permanent magnet products at a low price.

LCM Chief Executive Ian Higgins said that to be feasible, the UK plant should be a fully integrated plant covering raw materials, processing and magnet production. “We would say that the business model has to be like the Chinese, all joined up, ideally everything under same roof if possible."

Higgins, who has been to China more than 40 times, said that Chinese rare earth industry has been roughly vertically integrated into six government-mandated operational companies.

He believes that Britain is expected to build a magnet factory in 2024, and the final annual output of rare earth magnets will reach 2000 tons, which can meet the needs of about 1 million electric vehicles.

The study also suggests that the rare earth raw materials of the magnet factory should be obtained from the byproducts of mineral sands, which is much lower than the cost of mining new rare earth mines.

LCM would be open to establishing such a magnet plant with partners while another option would be to recruit an established magnet producer to build a British operation, Higgins said. British government support would also be vital.

The government's Department for Business declined to comment on details of the report, only saying it continues to work with investors to build "a globally competitive electric vehicle supply chain in the UK".

Last month, the UK government set out plans to achieve its net zero strategy, including spending 850 million pounds to support the roll out of EVs and their supply chains.

Thanks to China’s dominance on the rare earth Neodymium magnet supply, today China's production and sales of electric vehicles have ranked first in the world for six consecutive years, becoming the world's largest manufacturer and consumer of new energy vehicles. With the promotion of new energy vehicles by the EU and the gradual decline of China's subsidies for new energy vehicles, the sales of EVs in Europe have increased significantly in recent years, which is close to China.