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Hitachi Metals plans to start a low-cost neodymium magnet production line for electric vehicle (xEV) motors in China in 2022, with mass production starting in 2023. In addition to not using or curbing the use of heavy rare earth materials, its manufacturing methods will also be reformed. The company will increase its equipment availability through automation and reduce personnel costs. By increasing the proportion of overseas production, Hitachi Metals will increase the adjusted operating profit margin of its magnetic materials and electronics business from 2.4% in 2020 to 11.2% in 2022. The company will enhance its competitiveness by mass production of low-cost production lines in China, a resource-rich country.
The low-cost production line will be established at Hitachi Metals Sanhuan Magnetic Materials (Nantong) Co., Ltd., in which Hitachi Metals holds a 51 percent stake. The company has been mass-producing neodymium magnets and will meet the growing demand for xEVs at a lower cost. The magnet production process includes melting raw materials, sintering, heat treatment, cutting, etc. Low-cost production lines will be installed alongside existing production lines.
In Japan, low-cost production has proven feasible experimentally. Currently, Hitachi Metals is continuing to demonstrate for mass production in China. In order to switch to the new production line, the company will proceed to verify with customers that the process meets their requirements in terms of yield and quality.
Neodymium magnets are one of rare earth magnets. Hitachi Metals is phasing out or reducing the use of heavy rare earth materials such as dysprosium and terbium in response to sourcing and price risks before building new production lines. The design and manufacturing methods of magnet materials will be improved over time, but whether and to what extent they are used will be determined by the customer.
Hitachi Metals has been rebuilding its magnetic materials business over the past few years. Profitability at the business has deteriorated due to sluggish demand due to a slowing global economy and increased price competition with China and other rare metal producers.
In addition to China, the company has production bases in Kumagaya City, Saitama Prefecture, Foster Father City, Hyogo Prefecture, the Philippines and elsewhere, and the Saga base will close by the end of March 2022.
The business is currently in a recovery phase due to the resumption of vehicle production and the spread of xEVs for decarbonization, and Hitachi Metals executives said: "The business restructuring will end in March 2022." In addition to material processing, the company intends to further enhance the strength of its production base in China to gain a foothold in the global competition.
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