Due diligence in changing supply chains The permanent magnet perspective 2017-06-23 Feddo Bax Senior design & development engineer JLMAG Rare-Earth Europe BV

1. JLMAG Rare-earth Co ltd. introduction 2nd largest sintered NdFeB permanent magnet (PM) production China (6000 ton in 2016, 10000 ton in 2018) Close 1 billion RMB turnover 2016 Public listed local Shanghai stock marget (value 2.5 billion RMB) Bonded NdFeB PM (Injection, Compression) & bonded ferrite PM (injection) since 2017 First with completely vertical integrated supply chain

Electric and Hybrid vehicles 3. Permanent magnet applications Windpower Hydropower Tidal Power Green Electricity Electric and Hybrid vehicles High speed trains E-mobility Electric bike And many more:

4. Sintered NdFeB supply chain Sintered Neodymium-Iron-Boron (NdFeB) permanent magnets maximum strength Magnetic strength connected to ´Light Rare earth´ metals (Neodymium & Praesodymium) Magnet stability (temperature, demagnetisation) connected to ´Heavy Rare earth´ metals (Dysprosium & Terbium) Rare earth supply chain

5. Sintered NdFeB supply chain 2016 China quota system # Name China province Oxide quota (Tons/year) 1 North Rare Earth group Inner Mongolia Baotou Steel Union Inner Mongolia 59500 Light rare earth 2 South Rare Earth group Ganzhou Rare earth industry Jiangxi 9000 Heavy rare earth Jiangxi Copper Rare earth Sichuan 14400 Light rare earth 3 Xiamen Tungsten Fujian 2000 Heavy rare earth 4 China Minmetals Hunan 2000 Light/heavy rare earth 5 Guangdong Rising non-ferrous Guangdong 2200 Heavy rare earth 6 China Alco Guangxi + Sichuan 3600 Light/heavy rare earth 7 Others (Guangxi RE + Sichuan WFK + others 10600 Light rare earth

6. Sustainability of PM supply chains China Southern Rare Earth group: 1st China mine passing Central Government Certification system (>2011): 5 central government ministries: National development and reform Commission Ministry of Environmental protection Ministry of Water Resources State Administration of Work Safety Ministry of land and resources Independent Sustainability Audit Intertek: 95% (June 2016)

7. Current situation of PM supply chain One sustainable Chinese supply chain Customers & OEMs still tend to make final decision based on cost only Our experience: even with similar cost & quality of our green supply chain, still main large users consider grey supply chains Illegal mining still provides 1/3 of total Rare Earth materials in China! Mined recycling ???????

8. Our vision on future PM supply chain Supply chain transparency will become more and more important driven by public opinion & politics in and outside of China Transparency can be achieved by open audits, objective certification systems & clear traceability of raw materials. Additional cost of green supply chain for electric and hybrid vehicles can be compensated by huge cost reduction potential of rapid technological developments in permanent magnet production Cradle-to-cradle concept for magnets: use `design for recycling´ & solve reversed logistics ‘only’. Mined recycling ???????