Some Chinese rare earth permanent magnet firms' accusation of Hitachi Metals, Ltd. of an expired patent will deliver little impact on eight ones that have gained a license from the Japanese firm.
Hu Boping, a senior vice president with Beijing Zhong Ke San Huan High-tech Co., Ltd. (SZSE: 000970), said in an interview on August 12 that a total of eight Chinese rare earth permanent magnet firms including itself had won a license from Hitachi Metals and that was to say, only the eight firms in the Chinese mainland were allowed to export related products to the US market currently. And just because of this, some others planed to accuse the Japanese firm of an expired patent. However, there would be little possibility for them to win the case. Notably, in order to control the international market, there would be little possibility for the Japanese firm to grant a license to more Chinese rare earth permanent magnet firms in the near future.
Sun Baoyu, chairman of Shenyang General Magnetic Co., Ltd., said at a forum last Friday that together with a list of domestic rare earth permanent magnet firms, it planned to accuse Hitachi Metals of an expired patent and so far, an alliance consisting of eight members had been established. 10 more members would be allowed to join the alliance and in order to trigger a lawsuit in both the US and the Chinese mainland, each of them would prepare CNY 10 million. The patent was a neodymium iron boron-related one and had expired this year.
In line with industry observers, provided that they win the case, neodymium iron boron patent of the Japanese firm will be announced invalid. However, if they lose the case, there will be great possibility for them to make a compromise with the Japanese firm and enter the high-end magnetic material sector through gaining a license from the latter later. And once they step into the high-end magnetic material sector, eight partners of the Japanese firm in the Chinese mainland will be challenged badly.
Available data shows that China has a total of about 200 rare earth permanent magnet firms currently and utilization rate of their production capacity stood at only 30 percent on average last year. And among them, many experienced a loss-making operation or even a shutdown due to a low-end-market-oriented strategy. However, the eight ones that enter into a partnership with Hitachi Metals, including Beijing Zhong Ke San Huan High-tech, still enjoy a profit-making operation.
