An AC current flowing through an inductor will generate an AC magnetic field. If a conductive material, such as a metal object, is brought into the vicinity of the inductor, the magnetic field will induce a circulating current (eddy current) on the surface of the conductor.
The eddy current is a function of the distance, size, and composition of the conductor. The eddy current generates its own magnetic field, which opposes the original field generated by the sensor inductor. This effect is equivalent to a set of coupled inductors, where the sensor inductor is the primary winding and the eddy current in the target object represents the secondary inductor. The coupling between the inductors is a function of the sensor inductor, and the resistivity, distance, size, and shape of the conductive target. The resistance and inductance of the secondary winding caused by the eddy current can be modeled as a distance dependent resistive and inductive component on the primary side (coil). Figure 45 shows a simplified circuit model of the sensor and the target as coupled coils.