Highlights

• China controls nearly 90% of rare earth magnet production through decades of strategic industrial policy and investment.
• Rare earth magnet manufacturing is extremely complex, requiring specialized expertise, raw materials, and massive scale.
• Breaking China's magnet monopoly will require coordinated, long-term industrial policy and patient investment across mining, refining, and manufacturing.

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There’s a tiny component inside your Tesla motor, your iPhone speaker, and the spinning guts of a wind turbine that most people never think about: the rare earth permanent magnet. These are not humble fridge magnets. They’re neodymium-iron-boron marvels that pack an extraordinary punch in a compact form. Without them, much of modern life doesn’t work.

And here’s the kicker: nearly nine out of every ten of these magnets are made in one place—China.

A Monopoly Forged in Steel and Policy

China didn’t stumble into this dominance. Starting in the 1980s, Beijing poured money and policy muscle into the entire supply chain—digging the ore, refining the oxides, smelting the metals, and finally shaping them into magnets. At the same time, Chinese producers undercut Western rivals on price until most shut down. The result: China now produces roughly 240,000 tonnes of magnets a year, while the U.S. produces almost none.

According to Rare Earth Exchanges’ global rankings, the top seven magnet makers—all Chinese—outscale their Japanese and Western peers by orders of magnitude.

That’s not just an industrial story; it’s a geopolitical one. Nearly every advanced fighter jet, missile, EV, and offshore turbine relies on magnets made in, or sourced through, China. Which means Beijing has a lever it can pull—tighten exports of alloys here, ease shipments of finished magnets there—and the rest of the world has to live with the consequences.

Why Magnets Aren’t Like Making Toast

So why can’t the U.S. or Europe just “build some magnet factories” and be done with it? Because rare earth magnets are devilishly hard to produce, especially at scale.

First, you need the raw ingredients: neodymium, praseodymium, and, for high-heat performance, dysprosium or terbium. These are scarce, messy to separate, and mostly refined in—you guessed it—China. Even if you build a factory in Texas, you still need feedstock.

Second, the process itself borders on alchemy. Powder metallurgy, controlled grain boundaries, diffusion of heavy elements—it’s specialized know-how built over decades, and much of it is tacit. As Rare Earth Exchanges notes, you can’t buy a “magnet factory in a box.” You need engineers who have spent careers mastering the craft.

Third, many a magnet is bespoke. The magnets in a Ford EV motor aren’t the same as those in a drone, or in a smartphone speaker or in a missile system.  Customers demand years of testing and validation before they’ll switch suppliers. You don’t displace Chinese incumbents in a single model year; qualification cycles take years. Apple’s recent $500 million deal with MP Materials to build Apple-specific magnet lines in Texas underscores just how tailored this business is.

Finally, scale is everything. Chinese giants churn out tens of thousands of tonnes annually. A new U.S. plant starting at a thousand tonnes will simply have higher costs per unit. Beijing can flood the market with cheap magnets or squeeze exports of raw oxides at will—both tactics that have crushed rivals in the past.

The Mirage of Quick Fixes

That’s why President Trump’s recent claim that America will be “magnet independent within a year” rings hollow despite a Department of Defense rule that requires all defense contractors to secure magnets from non-Chinese sources by January 2027.

MP Materials’ Fort Worth facility, when fully ramped, may hit 10,000 tonnes per year. That covers barely half of projected U.S. demand by 2030—and that’s just one plant. As Rare Earth Exchanges bluntly put it: you cannot leap from near-zero to self-sufficiency in a year. Independence is a decade-long project, not a campaign slogan.

What It Will Take

Breaking China’s 90% grip will require coordinated industrial policy: subsidies, long-term contracts, patient capital, and serious environmental safeguards, not to mention workforce development support.   It will mean parallel investments in mining, refining, and recycling, not just shiny new factories. And it will demand something harder still—patience.

Because that tiny magnet hidden in your devices isn’t just a marvel of physics, it’s a symbol of how decades of strategy, discipline, and scale can tilt the balance of global power. And wresting even a sliver of that market back won’t be easy—or fast.

Sources: Rare Earth Exchanges analysis and database, industry rankings, and reporting.