Showa Denko Begin Construction of Second Rare Earth Magnetic Alloy Plant in China

Showa Denko K.K. (SDK) today began construction of a second rare-earth magnetic alloy plant in China at Ganzhou, Jiangxi Province, for start-up in the latter half of 2007. A ground-breaking ceremony was held today at Ganzhou for the new plant which will produce, with SDK’s advanced quick-cooling technology, 2,000 tons/year of neodymium (Nd)-based alloys for high-performance magnets.

The new plant will be operated by Ganzhou Zhaori Rare Earth New Materials Co., Ltd., a newly established joint venture with Tokai Trade Co., Ltd. of Japan and two Chinese rare-earth mineral producers, namely, Ganzhou Qiandong Industrial (Group) Co., Ltd., and Ganxian Hong Jin Rare Earths Co., Ltd. Upon completion of the new plant, SDK will begin producing 3,000 tons/year of Nd-based magnetic alloys in China, together with its existing 1,000-ton/year plant in Baotou, Inner Mongolia.

In addition to Nd, the new plant at Ganzhou will be able to use dysprosium (Dy) and terbium (Tb), the chemical elements that ensure high magnetic force for automotive magnets used at high temperatures. Dy and Tb are produced from ion-adsorption ores found only in such southern Chinese provinces as Jiangxi, Guandong and Fujian. The two Chinese partners in the JV are leading rare-earth mineral producers, having ion-adsorption ore mines and operating separation/purification and smelting facilities.

In 2002, SDK established Baotou Showa Rare Earth Hi-Tech New Material Co., Ltd., and began operating its first Nd-based magnetic alloy plant in China. Demand for Nd, Dy and Tb is continuing to grow. At the same time, it is feared that their prices would increase further and their exports would decline substantially due to China’s restriction of production, suspension of the refund of value-added tax, and cut in export licenses. Under the circumstances, SDK is strengthening its production capacities inside China so as to ensure stable supply of high-performance Nd-based magnetic alloys.

Nd-based magnets are being used in voice coil motors of hard disk drives, magnetic circuits of medical-use magnetic resonance imagers (MRIs) and in cellular phones. In addition, demand for Nd-based magnets is sharply increasing in recent years for use in hybrid cars and electric power steering devices. Thus, demand for Nd-based magnets is expected to grow at an annual rate of 15% or more in coming years.

Under the ongoing medium-term consolidated business plan, the Passion Project, SDK is allocating much of its resources to operations in the Electronics segment. SDK is committed to providing advanced products meeting customer requirements by securing stable supply of raw materials and developing new technologies.

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