If you’ve been following the slow-motion strategic panic over critical minerals, you know that Japan, Australia, the US, Canada, Europe and others are busy talking about China’s dominance in both rare earth mining and refining and rare earth magnet production. Those countries are even starting to do something about it.
What has been left out of the reports on this subject, until recently, is how and on whose equipment rare earth magnets are produced. Then, on May 1, Nikkei Asia reported that “Ulvac will soon move production of equipment that produces rare earth magnets to Japan from China”.
But this was misleading. On May 7, the company itself issued a press release:
ULVAC establishes Japan-based manufacturing for rare-earth magnet vacuum melting furnaces—orders expected to roughly triple year-over-year, driven primarily by demand in Europe and North America—
ULVAC, Inc. predicts that orders for its continuous vacuum melting furnaces dedicated to rare earth magnets will roughly triple year over year, driven primarily by magnet manufacturers in Europe and North America. In response to this increase in orders, ULVAC has decided to create a new production system for these furnaces in Japan. By adding a manufacturing site in Japan to its existing facility in China, ULVAC will build a two-site supply structure, offering customers diversified supply options.
ULVAC has about 70% of the global market for vacuum melting furnaces used in the production of rare earth magnets. Currently, all of its ovens are manufactured by a subsidiary in China and most of them are sold there. After the new plant starts operations in September, production in Japan will increase until it reaches about 15% of the total by 2030.
At least that’s how management sees it now. Of course, the figure can be increased if necessary. But the idea is to meet the demands of non-Chinese customers, not to break ties with China.
of melting furnace is the key to the rare earth production process. It melts and pours the rare earth alloy, creating a microstructure that determines the final performance of the magnet. Other ULVAC furnaces are used in subsequent stages of the magnetic material preparation process, including hydrogen decrepitation (which produces very fine grains of material), melting and aging.
ULVAC (derived from Ultimate in Vacuum) is a mid-sized Japanese manufacturer headquartered in Chigasaki, Kanagawa Prefecture, west of Tokyo – where the new factory will be located. Based on vacuum technology developed since its founding in 1952, ULVAC manufactures production equipment, components, analytical instruments and materials for manufacturers of semiconductors, other electronic and optical equipment, displays, EV batteries and industrial equipment.
In addition to rare earth magnets, ULVAC’s industrial equipment is used in the automotive, pharmaceutical, food and other industries. For the semiconductor industry, the company produces MHM (Metal Hard Mask) deposition systems used by manufacturers of advanced logic ICs, as well as depositions and other devices for manufacturers of high-bandwidth memory, NAND flash memory, power equipment and IC packaging. OLED display manufacturing equipment is another ULVAC specialty.
ULVAC is not a defense contractor, but its products are used to do any number of things that could be classified as dual-use. Therefore, it is an important part of Japan’s CMI (civil military integration) value chain.
ULVAC’s annual sales currently total about ¥260 billion ($1.64 billion at the current exchange rate). Its regional sales breakdown is approximately Japan 30%, China 35%, South Korea 13%, Taiwan 12% and Europe and other regions 10%.
Starting with an office in Beijing in 1983, ULVAC has established nearly a dozen joint ventures and subsidiaries in China, including a vacuum furnace manufacturing and sales company in Shenyang. It was therefore well positioned when China began to take over the rare earth mining, processing and manufacturing industry in the 1990s.
As politicians, strategic consultants and alarmed journalists tell us, China commands about 70% of global rare earth extraction and more than 90% of rare earth processing and magnet production. This makes China an essential supplier for manufacturers of defense equipment, electric vehicles, industrial engines, wind turbines, consumer electronics and medical devices.
Rare earth magnets are used throughout the defense industry, in fighter jets, missiles, drones, other weapon systems, sensors and communications equipment. Specific components that incorporate rare-earth magnets include motors, actuators, and generators, as well as guidance systems, radar, sonar, and lasers.
This should surprise no one. Twenty-two years ago, in May 2004, James B. Hedrick i US Geological Survey gave a presentation entitled “Rare Earths in Selected US Defense Applications” at the 40th Forum on Industrial Minerals Geology held in Bloomington, Indiana.
Hedrick noted that REEs (rare earth elements) are essential to US military technology, including:
- missiles – Tomahawk missiles, Joint Direct Attack Munitions (JDAM), precision guided weapons
- Radar Systems – Used on F-35 fighter jets and advanced jets
- Unmanned Aerial Vehicles (UAV) – Predator drones and next-generation surveillance technology
- Naval War – Virginia class submarines, Arleigh Burke destroyers and sonar systems
- Jet engines – Fighter jets like the F-16 depend on rare earth magnets
- High power laser – Advanced weapons and targeting systems
- Night Vision and Communications – Essential for battlefield operations and secure communications
How was something so important allowed to fall into the hands of a rival whom our beloved leaders never tire of reprimanding, sanctioning and warning? The polite way to put it is that the US and its allies were asleep at the wheel.
ULVAC expects orders for vacuum melting furnaces to triple to around ¥20 billion this fiscal year (6.5% of total order guidance for the fiscal year to June 2026), but this is likely to be only the initial lift. Over the next 5-10 years, orders and sales may increase several times as demand from user industries continues to grow and Japan, the US, Europe and other countries seek to establish rare earth magnet supply chains with less, or even zero, Chinese participation.
The 30% of the vacuum melting furnace market not supplied by ULVAC is shared between several American, European, Chinese, Indian and other Japanese companies. Of these, the most prominent are Consarc in USA, Italian company TAV and in China, ICS PVD technology (Shenyang) and limits Mining and Metallurgy Equipment, which is headquartered in Changsha, the capital of Hunan Province.
As noted on its website, Sinoran has business relationships with American, Canadian, British, Iranian and Chilean mining companies and has set up offices in Australia, Turkey, Canada and Iran.
As the rare earth magnet market expands internationally and new entrants emerge, demand is shifting from stand-alone devices to complete production lines and comprehensive technical support. This suits ULVAC’s extensive product line and long experience, but the Japanese company will have to fight to maintain its lead in this market.
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