The magnetics used in many high performance motors contain about 35% rare earth metals. During the early 2000's, the Chinese government made a decision to control these materials. They aggressively mined rare earth metals, driving down pricing. Lower prices forced mines around the world to close. Currently, Chinese companies supply approximately 97% of the world's rare earth metals.
A few years ago the Chinese began to trim output. This reduced the overall supply. Market forces drove up price of rare earth metals. Over the past year, pricing on rare earths has increased exponentially. Pricing as of July 2011 has been up to ten times what it was a year earlier.
Elwood actively seeks cost reductions both internally and from its suppliers while maintaining high standards for quality. Where possible, Elwood shares savings with customers. However as a result of the continuing high cost of materials, it is necessary for Elwood to impose a surcharge on motors utilizing magnets containing the affected rare earth metals. The surcharge directly reflects Elwood's increased cost of material as a pass-through based on the quantity (by mass) of rare earth metals used in a given motor.
The surcharge will be included on all motors shipped after July 31, 2011. The amount of the surcharge will be adjusted on a the first of each month.
