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Daido to Triple China Rare Earth Magnet Output to Take on Rivals

Dec. 7 (Bloomberg) -- Japan’s Daido Electronics, the world’s fourth-largest rare-earth magnet maker, plans to triple output in China so it can boost international sales and gain ground on its three bigger domestic rivals.

The Nakatsugawa city-based unit of Daido Steel Co. is investing in its two Chinese factories to boost their output to 1,000 tons of neodymium magnets a year in two or three years, which may help double its global market share, Managing Director Takashi Kamihara said in an interview in Tokyo.

Daido is accelerating expansion in China, which produces more than 90 percent of the rare-earth minerals used globally in products ranging from BlackBerrys to Toyota Motor Corp.’s hybrid cars amid growing concerns over supplies after recent disruptions to Chinese shipments and tightening export quotas.

“It’s very important carmakers secure long-term parts supplies,” Kamihara said yesterday. “Being located in China gives us an edge on raw-material procurement.”

Production in China will account for 50 percent of Daido Electronics’ total output, up from 30 percent now, when the expansion is complete, Kamimura said. The company will then look into exporting magnets to emerging economies, such as India, from China.

China wants rare-earths companies to add value by making more technologically advanced products rather than exporting the raw material. While it has cut foreign sale quotas of the minerals, there are no restrictions on exports of finished products.

Top Three Producer

Daido currently buys Chinese-made magnet powders, semi-processed material used to make rare-earth magnets, from Toronto-based Neo Material Technologies Inc, some of which are exported to Japan, Kamihara said. Daido’s magnets are used in vehicles built by companies including Toyota, Ford Motor Co., Nissan Motor Co.

Daido Electronics is aiming to become one of the top three producers worldwide by expanding in China and attracting customers with new magnets that cut or eliminate the use of higher-priced dysprosium, an additive to the parts used in hybrid cars to make them more heat resistant.

Rare-earths are a group of 17 chemically similar metal elements including cerium, dysprosium, lanthanum and neodymium. The price of dysprosium has nearly tripled to $400 per kilogram over the past year, while neodymium is priced at $98.5, four times the level of a year earlier, according to Daido.

The company estimates that based on revenue it ranks behind Hitachi Metals Ltd., TDK Corp. and Shin-Etsu Chemical Co., all based in Japan, in the rare-earth magnet market.

Daido Electronics plans to grow in Japan and Thailand at a slower pace. It will increase production in the two countries to 1,000 tons from 700 tons now, Kamihara said.

To contact the reporters on this story: Masumi Suga in Tokyo at; Yasumasa Song in Tokyo at

To contact the editor responsible for this story: Andrew Hobbs in Sydney at

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