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Summary
China controls mining, processing AND magnet manufacturing — three critical bottlenecks in one country
Description
NdFeB Permanent Magnet Supply Chain
This Sankey diagram traces the value of rare earth elements (REEs) through permanent magnet supply chain.
Key insight
China dominates three critical bottlenecks: rare earth mining (~60% by value), oxide separation and processing (~87% of global capacity), and NdFeB magnet manufacturing (~84% of global output). Even ore mined in Australia or the USA is largely exported to China for separation. This makes mine-level diversification insufficient on its own. Even though the four REEs shown can to some extent act as chemical substitutes, the diversification benefits are limited as China controls the mining and processing of all four.
Elements shown
- Neodymium (Nd) primary magnet material; by far largest flow in terms of mass and also value (~$3.5B/year globally)
- Praseodymium (Pr) alloyed with Nd as "NdPr", similar properties (~$1.0B/year)
- Terbium (Tb) heavy REE; 10x more expensive than Ne and highly concentrated in China/Myanmar (~$1.0B/year)
- Dysprosium (Dy) heavy REE, critical for high-temperature motor performance (~$600M/year)
What about Russia and Africa?
Both are marginal for NdFeB-relevant elements. Russia produces under 1% of global output, mostly lighter elements (La, Ce). Africa has significant undeveloped REE deposits (Tanzania, Malawi, South Africa) attracting growing exploration interest. Current production is small, with Burundi the most important contributor.
End-use applications
NdFeB permanent magnets are fundamental to electrified industry broadly:
- Industrial motors is currently the most important use of magnets that are in any high-efficiency electric motor in a factory, pump, compressor, or elevator
- Defense uses magnets in guided munitions, radar, submarine propulsion, (F-35 uses ~400kg of REEs per aircraft)
- Medical, the magnet is the key componennt of MRI scanners
- Data infrastructure uses magnets in hard disk drives in servers
- Robotics and automation needs magnets for every servo motor
In addition comes the new growth application from wind turbines and EVs.
Data
- Production volumes and prices: USGS Mineral Commodity Summaries 2024
- Processing/magnet shares: JRC Critical Raw Materials Assessment 2023, Adamas Intelligence
- End-use breakdown: IEA Critical Minerals Market Review 2023