Magnet Rare Earths

The Permanent Magnet Revolution

Permanent magnets are the silent workhorses of the modern economy. They convert electrical energy into mechanical motion and vice versa with unmatched efficiency, and they do so without requiring an external power source to maintain their magnetic field. At the center of the most powerful permanent magnets ever created are four rare earth elements: neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb). These four elements, when combined with iron and boron in precise metallurgical formulations, produce neodymium-iron-boron (NdFeB) magnets — materials with magnetic energy densities up to ten times greater than traditional ferrite magnets. This extraordinary performance has made NdFeB magnets indispensable to electric vehicle drivetrains, wind turbine generators, industrial robotics, and countless consumer electronics.

Neodymium: The Core of NdFeB Magnets

Neodymium is the defining element of modern permanent magnet technology. Discovered in 1885 by Carl Auer von Welsbach, neodymium remained a chemical curiosity until 1982, when General Motors and Sumitomo Special Metals independently developed the NdFeB magnet composition. The Nd2Fe14B crystal structure produces a maximum energy product (BHmax) of approximately 512 kJ/m3 in theory, with commercial magnets achieving 200-450 kJ/m3 depending on grade. This energy product — a measure of the magnetic energy a magnet can store — far exceeds any other permanent magnet material. A typical electric vehicle traction motor contains 1 to 3 kilograms of NdFeB magnet material, of which roughly 29 to 32 percent by weight is neodymium. Global neodymium consumption reached approximately 45,000 tonnes in oxide equivalent in 2024, with magnets accounting for over 90 percent of that demand.

Praseodymium: The Essential Partner

Praseodymium works alongside neodymium in NdFeB magnets as part of a didymium alloy historically sold as "NdPr" or "mischmetal." In practice, most commercial magnet formulations use a neodymium-praseodymium mixture rather than pure neodymium, because the two elements co-occur in ore and are expensive to fully separate. Praseodymium substitutes for neodymium at levels of up to 25 percent without significant loss of magnetic performance. This interchangeability means that the market often tracks "NdPr oxide" as a combined commodity. Praseodymium also finds applications outside of magnets, including as a component of high-strength alloys in aircraft engines, as a yellow ceramic pigment, and as a dopant in specialized optical fibers. However, the magnet sector dominates praseodymium demand, consuming roughly 75 percent of total supply.

Dysprosium: The High-Temperature Enabler

Dysprosium plays a small but absolutely critical role in permanent magnets. NdFeB magnets in their base composition begin to lose their magnetization at temperatures above approximately 80 degrees Celsius due to declining coercivity — the ability of the magnet to resist demagnetization. This thermal limitation is unacceptable for electric vehicle traction motors, which routinely operate at 150 to 200 degrees Celsius, and for wind turbine generators exposed to variable thermal conditions. Adding dysprosium to the NdFeB alloy at concentrations of 4 to 11 percent by weight dramatically increases coercivity, enabling the magnets to maintain their performance at elevated temperatures. This makes dysprosium a bottleneck element: even though it constitutes only a small fraction of each magnet by weight, without it, NdFeB magnets cannot function in the very applications driving the strongest demand growth.

Dysprosium is a heavy rare earth element sourced primarily from ion-adsorption clay deposits in southern China and Myanmar. Its supply is substantially more constrained than that of neodymium, and its price per kilogram is typically 5 to 15 times higher. The combination of critical functionality and tight supply has made dysprosium the subject of intense research into grain boundary diffusion processes that can reduce the amount of dysprosium needed per magnet by up to 50 percent while maintaining equivalent performance. Major magnet manufacturers including Shin-Etsu, TDK, and Hitachi Metals have invested heavily in these techniques.

Terbium: Dysprosium's Scarcer Alternative

Terbium can partially substitute for dysprosium in enhancing magnet coercivity, offering similar thermal stability improvements at somewhat lower concentrations. However, terbium is even scarcer and more expensive than dysprosium — typically trading at $800 to $1,500 per kilogram compared to dysprosium's $250 to $400 range. Terbium is also in demand for non-magnet applications, particularly as a green phosphor in fluorescent lighting and displays, and as a magnetostrictive element in Terfenol-D actuators used in sonar systems and precision positioning equipment. The competition between magnet and phosphor applications for limited terbium supply adds another layer of complexity to the magnet rare earth supply chain.

Demand Growth from Electric Vehicles

Electric vehicles represent the single largest growth driver for magnet rare earths. A typical battery electric vehicle with a permanent magnet synchronous motor uses 1 to 3 kilograms of NdFeB magnets in its traction motor, plus additional magnets in power steering, window motors, seat adjusters, and other auxiliary systems. Some dual-motor and performance configurations use even more. With global EV sales exceeding 17 million units in 2024 and projected to surpass 40 million annually by 2030, the cumulative demand for neodymium, praseodymium, and dysprosium from the automotive sector alone is staggering. Analysts at Adamas Intelligence estimate that the EV sector's consumption of NdPr oxide could reach 75,000 to 95,000 tonnes annually by 2035, up from approximately 25,000 tonnes in 2024.

Demand Growth from Wind Energy

Offshore wind turbines represent the second major growth vector. Direct-drive wind turbines — increasingly favored for offshore installations because they eliminate the gearbox, reducing maintenance requirements in harsh marine environments — use permanent magnet generators containing 600 to 700 kilograms of NdFeB magnets per megawatt of capacity. A single 15-megawatt offshore turbine can therefore contain over 4,000 kilograms of rare earth magnets. As offshore wind capacity expands globally, driven by ambitious targets in Europe, the United States, China, and East Asia, the demand for magnet rare earths from this sector is projected to grow at a compound annual rate exceeding 15 percent through 2035. The combination of EV and wind demand creates a compounding effect that challenges existing supply infrastructure.

Supply Chain Challenges and Strategic Response

The supply chain for magnet rare earths faces multiple bottlenecks. Mining capacity for neodymium and praseodymium is expanding, with projects in Australia, Canada, and the United States progressing toward production. However, the downstream stages — separation and processing of rare earth concentrates into individual oxides, metal reduction, alloy production, and magnet manufacturing — remain overwhelmingly concentrated in China. Building alternative processing capacity requires not only capital investment but also mastery of complex hydrometallurgical techniques, environmental permitting for radioactive thorium waste streams, and development of skilled workforces. Government programs in the United States, European Union, Japan, and Australia are investing billions to build parallel supply chains, but industry experts estimate that meaningful diversification of magnet rare earth processing will take until the early 2030s at the earliest. In the interim, recycling of end-of-life magnets and development of reduced-rare-earth magnet formulations offer important pathways to mitigate supply risk.