EG, Soaring Due to High-Purity Iron Oxide Production
China Considers Rare Earth Export Restrictions...Urgent Need for Alternatives
As China shows signs of weaponizing rare earth elements, rare earth-related stocks are gaining attention in the domestic stock market. This appears to be due to growing interest not only in secondary batteries, which heavily use rare earths, but also in electric vehicle motors. While no substitute material has been found for rare earths in secondary batteries, alternatives for rare earths used in electric vehicle motors are attracting attention. The electric vehicle industry, including Tesla, is considering reducing dependence on rare earths by using Ferrite Magnets.
At 11:36 a.m. on the 25th, EG was trading at 23,900 KRW, up 29.75% from the previous day. Rare earth-related stocks such as Hankook Refractories, Union, and Union Material are all showing strong performance.
Secondary battery companies rely on China for over 90% of their core raw material imports, and some items are entirely imported from China. Since President Yoon Suk-yeol's administration has strengthened a pro-US, anti-China stance, there are growing concerns that rare earth imports from China may be restricted.
According to industry sources, China is recently pushing a revision bill to control the export of permanent magnet manufacturing technologies for rare earths such as neodymium and samarium-cobalt. As demand for electric vehicles surges, the value of rare earths is increasing day by day. The permanent magnets made from rare earths are the core of electric vehicle motors. Since the magnetism of rare earth permanent magnets drives the electric motor of electric vehicles, ultimately, the performance of electric vehicles is determined by rare earth permanent magnets.
Union Material operates a ferrite magnet business. It is considered an essential industry for the development of parts industries as a material for motors used in automotive electronics, home appliances, or compressors. Ferrite magnets used in automotive motors must undergo long-term durability tests to ensure reliability and safety before they can be applied. Due to the nature of the automotive industry, there are also entry barriers such as stringent delivery and quality requirements from parts manufacturers.
As a typical B2B business, parts development is possible through cooperation between parts manufacturers and material suppliers, so maintaining close relationships between these parties is essential. It takes a long time for new companies to enter and establish reliability.
Ferrite magnets are used in motors that improve vehicle convenience, safety, driving performance, and fuel efficiency, and recently, about 50 motors are installed in cars. Since they are used in various motors, the usage of ferrite magnets is expected to continue increasing along with the development of new automotive motors. Union Material supplies motors to Hyundai Motor Company, Kia, GM Daewoo, Volkswagen, GM, Ford, BMW, PSA, and others. When developing new car models, motor development as an automotive electronic component begins simultaneously with the development of Union Material's ferrite magnets. The company’s market share is estimated to be about 10-12% globally and about 30% domestically. Union Material is also developing power module components for electric vehicles.
EG produces high-purity iron oxide used as a raw material for magnetic parts in electric vehicle and home appliance motors. It is the world's only iron oxide specialist company equipped with design, construction, and operational capabilities for iron oxide water treatment facilities, consistently maintaining the number one global market share in premium iron oxide.
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