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Highlights
- China has banned the export of rare earth magnet production technologies, signaling their strategic importance in the global technological race.
- Rare earth magnets are critical in modern technology, enabling efficient energy conversion in electric motors, wind turbines, and advanced electronics.
- With China controlling 90% of rare earth magnet production, global efforts are underway to develop alternative materials and secure supply chains.
In a bold assertion of its technological and economic power, China has banned the export of rare earth magnet production technologies for national security reasons. This move does not restrict the sale of rare earth magnets themselves but rather the sophisticated manufacturing processes that make them. Rare earth elements have broad commercial applications, yet their most strategic use is in permanent magnets, which are essential for everything from electric motors to wind turbines. While the total market for rare earth compounds was valued at about $4 billion in 2024, their significance in modern technology has earned them the nickname the “vitamins” of the tech economy. China’s recent policy shift signals that rare earth magnets are not just valuable materials but strategic assets in the global technological race.
Why Rare Earth Magnets Matter
Rare earth magnets play a crucial role in converting electricity into mechanical energy and vice versa. Unlike electromagnets, which require an external power source, permanent magnets generate a consistent magnetic field without additional energy input. Their power and space efficiency make them irreplaceable in high-performance applications.
A 3-millimeter rare earth magnet can deliver the same magnetic force as a 13-amp electric coil, and in many cases, permanent magnets take up to five times less space than an electromagnetic coil. As a result, they are indispensable in electric motors, hand tools, hard drives, and laser systems. Currently, 20-35% of global rare earth production is dedicated to magnet production, a number expected to rise dramatically as demand for electric vehicles (EVs), wind turbines, and advanced electronics surges. According to the International Energy Agency (IEA), rare earth demand in 2040 will be 3-7 times higher than in 2020, making supply chain security a growing concern.
The Evolution of Permanent Magnets
Magnets have been known for millennia, but high-performance permanent magnets are a relatively modern innovation. Before the 20th century, the strongest available magnets were based on high-carbon steels and tungsten-cobalt alloys. The first major breakthrough came in 1932 when Japanese scientist Tokushichi Mishima (opens in a new tab) developed Alnico magnets composed primarily of aluminum, nickel, cobalt, and iron. These magnets were cheaper and more resistant to demagnetization than earlier steel-based versions. In the 1950s, ferrite magnets were introduced, offering even greater coercivity (resistance to demagnetization) and affordability. However, both Alnico and ferrite magnets were eventually overshadowed by rare earth magnets, which revolutionized the field due to their superior strength and efficiency.
The Rise of Rare Earth Magnets
Despite their name, rare earth elements are not particularly rare—they are often more abundant in the Earth’s crust than copper or tin. However, extracting and refining them is extremely complex and requires advanced chemical processing techniques. The first commercial application of rare earths dates back to the 19th century, when Carl Gustav Mosander isolated lanthanum from cerium nitrate. By the 1940s and 1950s, scientists at Iowa State University’s Ames Laboratory pioneered ion exchange and solvent extraction methods, vastly improving rare earth separation and refinement. The development of the Mountain Pass Mine in California in 1949 provided the United States with a reliable rare earth supply, and by the 1960s, American companies dominated global production.
The first major rare earth magnet, the samarium-cobalt (SmCo) magnet, was developed in the 1960s by researchers at Wright-Patterson Air Force Base. These magnets were powerful but expensive, relying heavily on cobalt, which was subject to supply chain disruptions. In response, American and Japanese researchers sought a cheaper and stronger alternative, leading to the 1983 invention of neodymium-iron-boron (NdFeB) magnets by General Motors and Sumitomo (later Hitachi Metals). The neodymium magnet quickly became the global standard, particularly in hard drives, EV motors, and industrial machinery. However, this transition coincided with China’s growing dominance in rare earth mining and production.
China’s Rare Earth Monopoly
The United States lost its leading role in rare earth production in the 1980s and 1990s due in part to environmental regulations and declining domestic demand. Simultaneously, China ramped up production at Baiyun Obo, the world’s largest rare earth mine, refining techniques and industrial capacity. By 2002, the closure of Mountain Pass Mine left China as the world’s sole major supplier of refined rare earths. In the early 2000s, China further cemented its dominance by attracting foreign manufacturers to relocate, benefiting from its low-cost labor, high-volume production, and state subsidies. Even major Western companies like Hitachi Metals and Magnequench (formerly an American defense contractor) moved operations to China.
By 2011, China controlled over 90% of rare earth magnet production and leveraged this dominance to impose export restrictions on materials like dysprosium, a key additive in high-temperature magnets. These actions triggered a geopolitical response, leading to efforts by the U.S., Japan, and Australia to re-establish rare earth supply chains. However, China still refines and processes the vast majority of the world’s rare earths, even if new mines outside China are coming online.
The Challenge of Finding Alternatives
With China controlling 90% of rare earth magnet production, alternative strategies are needed to mitigate supply chain risks. Reducing dependency on neodymium and dysprosium could cut material costs by 30-66%, while improving sustainability. However, recycling rare earth magnets remains underdeveloped, with less than 1% of discarded rare earth materials being reclaimed as Rare Earth Exchanges has reported. While Alnico and ferrite magnets are still in use, they lack the coercivity and strength of rare earth magnets, limiting their viability in high-performance motors.
Some companies are working on rare-earth-free motor designs. Tesla’s Model S originally used an induction motor, but later models transitioned to permanent magnet-based systems due to their superior efficiency. In March 2023, Tesla announced it was eliminating rare earths from future motors (opens in a new tab), possibly in favor of ferrite-based or advanced wound rotor designs. Other companies, like Renault, have explored switched reluctance motors, which do not require permanent magnets.
Conclusion: The Future of Rare Earth Magnets
Rare earth magnets remain the most cost-effective and powerful option for electric motors and other applications. Despite geopolitical concerns, China’s dominance in magnet production is unlikely to be seriously challenged in the short, and likely not the intermediate term either. While efforts are underway to develop alternative materials and motor designs, the demand for rare earth magnets will continue to grow, driven by wind power, electric vehicles, and other green technologies., not to mention need in all sorts of electronics and defense systems. If Western nations hope to secure their supply chains, they must invest in domestic rare earth processing, advanced recycling, and material innovation. Until then, China’s grip on the global rare earth magnet industry remains firm.
Daniel
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