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There are two commercially important classes of permanent magnets: ferrite (iron-based) and neodymium-ironboron ("NdFeB") (rare-earth based). According to Roskill Information Services Ltd. ("Roskill"), a leading independent metals and minerals research firm, ferrite magnets accounted for 88% of 2016 global production with NdFeB and other permanent magnets accounting for 11% and 1%, respectively. China leads the production of permanent magnets and accounts for more than two-thirds of world production.

Ferrite magnets represent the largest market and are used in a wide range of lower performance applications where low cost is critical but size and efficiency is less important. NdFeB magnets are preferred in applications where high performance, efficiency and small size are paramount. There are three primary types of NdFeB magnets: sintered, bonded and hot deformed. Sintered magnets are stronger relative to bonded magnets; however, bonded magnets are better suited for applications that require small or complex shapes due to their ability to be pressed and extruded without further processing.

According to Roskill, sintered magnets currently account for 91% of production with bonded and hot deformed magnets accounting for the remaining 9%. Since bonded and hot deformed magnets represent a small portion of the broader permanent magnet market, small market share gains at the expense of ferrite and sintered magnets represent meaningful growth.

NdFeB magnets exhibit the highest magnetic strength of any permanent magnet commercially available. According to Roskill, global demand for rare earth oxide ("REO") in permanent magnet applications is forecast to grow at an estimated 10.1% compound annual growth rate ("CAGR") from 2016 to 2021. Growth of permanent magnets has come from the use of small size NdFeB magnets in motors, sensors and actuators for consumer electronics and automotive applications. In addition, increasing quantities of NdFeB magnets have been used in wind turbines and motors for new energy vehicles (i.e. hybrid electric and electric vehicles).

In particular, electrification of automobiles has led to increased demand for smaller, more efficient micro motors using NdFeB magnets to reduce weight and improve efficiency. This is both true in developed markets, where certain luxury vehicles can have up to 100 micro motors, as well as in emerging markets, where cars are beginning to incorporate power seats, power doors, power windows, sensors and other features. The development of HEVs and EVs is also emerging as a key market trend as these vehicles tend to require significant numbers of micro motors and other rare earth content.

NdFeB magnets are used in a wide array of high-performance micro motors and sensors as well as in a variety of end markets including the automotive sector, HDDs and cloud computing, home appliances, residential circulation heating pumps and office automation. The emergence of clean energy applications has also opened up new end markets, including HEVs and EVs. These functional materials are highly specialized and in many cases uniquely engineered for a specific customer application. NdFeB hot deformed magnets, which have magnetic properties closer to sintered magnets, are used in electronic power steering and hybrid electric vehicle traction motors, as well as in factory automation robotics.

In particular, electrification of automobiles has led to increased demand for smaller, more efficient micro motors using NdFeB magnets to reduce weight and improve efficiency. This is both true in developed markets, where certain luxury vehicles can have up to 100 micro motors, as well as in emerging markets, where cars are beginning to incorporate power seats, power doors, power windows, sensors and other features. The development of hybrid electric vehicles ("HEV") and electric vehicles ("EV") is also emerging as a key market trend as these vehicles tend to require significant numbers of micro motors and other rare earth content.