The eddy currents are known as the Faucault currents. Whenever a material is placed in an alternating magnetic field, the eddy currents are induced in it. It is because the material is subjected to the rate of change flux linkage and in accordance with the Faradays laws of electromagnetic induction. The direction of these currents is always opposing the cause to produce them. These currents causes loss of energy (I2R) in the material where I is the induced eddy current, R the resistance of the material. It results in the heating of the material.
The eddy current loss is proportional to the square of frequency, square of the thickness of the material and inversely proportional to the resistivity of the material. This is the main consideration that the magnetic cores to be used in an alternating magnetic field are made of thin sheets, called lamination, instead Of a solid block. An insulation is also used in between the laminations, to avoid the short circuiting. The insulation may be of thin layer of insulating varnish, a paper or sometimes a sheet of paper. An efficient insulation for silicone steel sheet is a film of phosphate chemically deposited on the surface. The eddy Current losses are proportional to the square of the flux density.