Before high-efficiency data center cooling systems, facilities relied on belt-driven induction fans and fixed-speed pumps that wasted energy and struggled with airflow control, making uptime and density scaling difficult as IT heat loads rose. After electronically commutated (EC) fans, variable-speed permanent-magnet pumps, and tighter controls, operators gained turndown efficiency, stable pressure/flow, and faster response to thermal transients, enabling higher rack densities and lower PUE. Rare earth elements (REEs) sit inside many of these gains: magnets (Nd, Pr, Dy, Tb, Sm) for compact, efficient motors; phosphors/optics (Y, Ce, Eu) in LEDs and sensors for status/monitoring; and specialized alloys/coatings (Y2O3-based ceramics) for thermal stability in harsh environments. This article explains which REEs appear in cooling subsystems, how their physics translates into airflow, pumping, and control benefits, and where the supply chain is concentrated.
Table of Contents
How did data center cooling systems change digital infrastructure
Before the rise of high-efficiency cooling technologies, data centers struggled with basic environmental control. Facilities relied on belt-driven induction fans and fixed-speed pumps that ran at constant speeds regardless of actual cooling demand. These systems wasted massive amounts of energy and made it nearly impossible to control airflow precisely as server heat loads increased.
The introduction of electronically commutated (EC) fans and variable-speed permanent-magnet pumps transformed how data centers manage heat. These technologies brought turndown efficiency, stable pressure control, and rapid response to temperature changes. This shift enabled facilities to pack more computing power into each rack while actually reducing their Power Usage Effectiveness (PUE) – the key metric for data center energy efficiency.
What many people don't realize is that rare earth elements sit at the heart of these cooling advances. Powerful magnets containing neodymium, praseodymium, dysprosium, and terbium enable compact, efficient motors. Phosphors and specialized ceramics containing yttrium, cerium, and europium help with monitoring and thermal stability. Without these elements, modern data center cooling simply wouldn't work at the scale and efficiency we need today.
Rare Earth Role in Data Center Cooling Systems
Which elements are used and why
The most critical rare earth elements in cooling systems are neodymium (Nd) and praseodymium (Pr). These elements create the powerful NdFeB magnets that drive EC fan motors and high-efficiency pumps. Their exceptional magnetic strength allows motors to be much smaller while delivering higher torque at the moderate temperatures found in most data centers, according to the U.S. Department of Energy's analysis of rare earth permanent magnets.
When cooling equipment operates near hot aisles or inside compact pump housings, engineers add dysprosium (Dy) and terbium (Tb) to the magnet mix. These heavier rare earths maintain magnetic strength at higher temperatures, preventing demagnetization when things get hot. In the most demanding applications, samarium-cobalt (SmCo) magnets provide even better thermal stability where space is tight and failure isn't an option.
Beyond magnets, yttrium, cerium, and europium show up in the phosphors that create white light in LED status indicators and optical sensors throughout cooling control systems. Yttrium oxide (yttria) also forms high-temperature ceramic coatings that protect components. Looking ahead, gadolinium could play a role in magnetocaloric cooling – a solid-state alternative to traditional vapor compression that's still in development, as noted in Nature Materials' review of magnetocaloric materials.
The availability of these elements varies significantly. Light rare earths like neodymium and praseodymium are relatively abundant compared to heavy rare earths like dysprosium and terbium. This scarcity shapes how engineers design magnets, pushing them to minimize heavy rare earth content while still meeting thermal requirements, according to the IEA's Critical Minerals Market Review 2023.
How Data Center Cooling Systems
The connection between rare earths and cooling performance is straightforward once you understand the physics. In an EC fan tray, the NdFeB rotor containing neodymium and praseodymium (plus dysprosium and terbium as needed) creates high magnetic remanence and coercivity. This translates directly into high static pressure at lower input power, plus precise variable-speed control that's essential for containment strategies and economizer modes.
In coolant distribution units (CDUs) and pump skids, permanent magnet synchronous or brushless DC pumps use these same NdFeB or SmCo magnets. The strong magnetic torque allows for a compact form factor while delivering higher hydraulic efficiency, reduced heat generation, and better turndown capability for liquid cooling loops, as documented by NREL's research on permanent magnet motor efficiency.
Even the valve and actuator assemblies that control coolant flow rely on miniature permanent magnet stepper or servo motors with NdFeB magnets. These provide high positioning precision and holding torque, enabling stable control of flow rates and temperature differentials. This precision allows for tighter approach temperatures and lower temperature differences across cooling coils.
In hot environments where derating is a concern, SmCo magnets or dysprosium/terbium-enhanced NdFeB maintain their coercivity at elevated temperatures. This prevents demagnetization during thermal excursions or when equipment operates near hot discharge plenums, as explained in Arnold Magnetic Technologies' comparison of magnet temperature performance.
Journey from Mine to Product
Supply chain steps
The path from raw ore to finished cooling equipment involves multiple complex steps. Mining operations extract bastnäsite, monazite, or ion-adsorption clays to produce mixed rare earth concentrates. The ratio of light to heavy rare earth elements in these concentrates determines what can be produced downstream, according to USGS mineral commodity summaries (opens in a new tab).
Next comes separation – perhaps the most challenging step. Through solvent extraction, refineries separate individual rare earth oxides like Nd2O3, Pr6O11, Dy2O3, Tb4O7, and Sm2O3. This process requires significant capital investment, uses large amounts of chemicals, and must meet strict environmental controls. The IEA's 2023 report (opens in a new tab) highlights how this step remains a major bottleneck in the supply chain.
These oxides then get reduced to metals and alloyed into magnetic materials like Nd-Pr-Fe-B or Sm-Co systems. Manufacturers process these alloys into powders for sintered or bonded magnets, carefully controlling grain size and coercivity to meet specifications outlined in the DOE's rare earth permanent magnet report.
Finally, magnetized rotors and stators are assembled into EC motors, pumps, and actuators. Control systems integrate with building management systems (BMS) and data center infrastructure management (DCIM) platforms for variable-speed operation and failure detection. Units undergo quality assurance and burn-in testing before deployment in data halls, following guidelines from ASHRAE's Datacom series.
Typical chokepoints
The biggest constraint in this supply chain is geographic concentration. China dominates both oxide separation and magnet manufacturing, creating price volatility and availability risks that worry data center operators and equipment manufacturers alike. The IEA's 2023 analysis shows this concentration has actually increased in recent years.
Heavy rare earths like dysprosium and terbium represent a structural scarcity problem. They're often the limiting factor for achieving high-temperature coercivity in magnets. Engineers work around this through grain-boundary diffusion techniques and design modifications that reduce the amount of these critical elements needed, as detailed in the DOE's permanent magnet report.
The specialized manufacturing steps for magnets – powder metallurgy, sintering, and precise coating application – can't be scaled up quickly. These processes require tight intellectual property and process control to meet performance and corrosion specifications. The European Commission's JRC technical assessment (opens in a new tab) identifies these manufacturing bottlenecks as key vulnerabilities in the supply chain.
Statistics & Societal Impact
Quantitative snapshot for Data Center Cooling Systems
The numbers tell a stark story about data center growth and cooling demands. Data centers consumed approximately 460 TWh of electricity in 2022 and could reach 620 to 1,050 TWh by 2026 as AI and cloud workloads expand, according to the IEA's analysis of data centers and transmission networks.
The average Power Usage Effectiveness (PUE) reported by operators was about 1.58 in 2023, showing steady but slow efficiency improvements. Cooling represents a major portion of the overhead energy use between the theoretical perfect PUE of 1.0 and actual measured values, as documented in Uptime Institute's Global Data Center Survey 2023.
The global data center cooling market reached roughly $12.7 billion in 2023 and is projected to hit $17.8 billion by 2028, according to MarketsandMarketsresearch. This growth directly drives demand for rare earth-containing components.
China's dominance in the rare earth supply chain is overwhelming – the country accounted for 85-90% of rare earth processing and around 90% of rare earth magnet manufacturing in 2022-2023, as reported by the IEA's 2023 critical minerals review.
Innovators & History
Key breakthroughs
The foundation for modern cooling efficiency came in 1982-1984 when NdFeB permanent magnets were invented independently by Masato Sagawa at Sumitomo and John J. Croat at General Motors. These discoveries unlocked high-energy magnets suitable for compact, efficient motors, as documented in Sagawa's Japanese Journal of Applied Physics paper and Croat's Journal of Applied Physics publication.
Through the 1990s and 2000s, EC motors with NdFeB magnets gradually penetrated the HVAC market. These variable-speed fan systems eventually became standard in computer room air handlers (CRAH/CRAC units), as tracked by the DOE's Better Buildings program on ECM technology.
The mid-2000s saw the emergence of rear-door heat exchangers to address rising rack densities in enterprise data centers. IBM's Rear Door Heat eXchanger pioneered this approach to capture heat right at the source.
From the 2010s through today, grain-boundary diffusion techniques have reduced dysprosium usage while maintaining high-temperature coercivity in NdFeB magnets. This innovation helps mitigate heavy rare earth constraints that threatened to limit cooling system deployment, according to the DOE's permanent magnet report.
From lab to product
The translation of magnet advances into practical cooling equipment required extensive collaboration between magnet producers and motor manufacturers. They developed manufacturable EC fans and pumps with corrosion-resistant coatings, sealed rotors, and integrated drives that met electrical and fire code requirements, as detailed in Arnold Magnetics' application notes.
Data center equipment vendors then integrated these motors into various cooling platforms – CRAH/CRAC units, in-row coolers, and rear-door heat exchangers. More recently, they've incorporated them into CDUs for direct-to-chip and immersion cooling systems. These systems use BMS-ready controls for variable airflow and pressure management, following ASHRAE Datacom series guidelines.
Conclusion
Rare earth elements have fundamentally transformed data center cooling systems from inefficient belt-driven systems to precision-controlled, high-efficiency operations. NdFeB magnets enable EC fans and PM pumps that achieve 10-20% efficiency gains at part load, while Dy/Tb additions maintain performance in high-temperature environments. As AI workloads drive rack densities higher and sustainability targets demand lower PUE, the role of REE-based cooling technology becomes even more critical. However, with China controlling 85-90% of processing and magnet manufacturing, supply chain diversification through domestic production, recycling, and heavy REE reduction strategies is essential. The next decade will see continued innovation in grain-boundary diffusion, alternative materials, and system optimization to balance performance needs with supply security.
FAQs
Where do rare earths physically sit inside data center cooling systems?
Rare earths are primarily inside permanent magnets used in EC fan motors, PM pumps on chilled water or liquid cooling loops, and small actuators/servos that modulate valves and dampers. You may also encounter REE phosphors in indicator LEDs and yttria-based ceramics in high-temperature components, but magnets carry the main performance contribution.
u003cbru003eWhy not use induction motors and avoid rare earths?
Induction motors work well at fixed speed but lose efficiency at part load when paired with VFDs and larger frames, and they have lower torque density than PM designs. PM motors with REE magnets achieve higher efficiency over a wide turndown range and smaller size, which matters in constrained racks, in-row units, and CDUs.
Are heavy rare earths (Dy/Tb) always necessary in cooling motors?
No. They are used when magnets face higher operating temperatures or demagnetizing fields; many CRAH fans and pumps can use low- or no-Dy grades. Designers increasingly apply grain-boundary diffusion and thermal derating to cut Dy/Tb while maintaining coercivity.
How exposed are cooling systems to REE supply risk?
Exposure is moderate to high because China dominates separation and magnet manufacturing, which can affect price and lead times. Risk mitigation includes dual-sourcing, specifying Dy-lean grades, qualifying ferrite/La-Ce-rich alternatives where feasible, and engaging recycled magnet suppliers.
Could magnetocaloric cooling replace vapor compression in data centers?
Not soon. Gadolinium-based magnetocaloric systems show promise in labs but face challenges in cost, field strength, and system integration at multi-kW to MW scales. For the next decade, their role is likely limited to niche applications while vapor compression, evaporative systems, and liquid cooling dominate.
