Highlights
- Magnetic rare earth demand projected to grow from 59,000 to 176,000 tons by 2035, with potential 30% supply shortfall.
- Recycling technologies are promising but not an immediate fix, requiring significant infrastructure, investment, and technological scaling.
- Circular rare earth strategies aim to reduce dependency on Chinese supply chains and address critical material needs for emerging technologies.
McKinsey’s recent “Circular Rare Earth Elements (opens in a new tab)” report projects that demand for magnetic rare earths (e.g. Nd, Pr, Dy, Tb) will triple from ~59,000 tons in 2022 to ~176,000 tons by 2035. Supply from currently announced mines and refiners could fall short by roughly 30% (≈ 60,000 tons) by 2035, unless China ramps up production or more pipelines elsewhere come online. McKinsey also estimates that by 2035 the REE value chain could supply ~40,000 tons of pre-consumer scrap and ~41,000 tons of post-consumer scrap from end-of-life products, appliances, EVs, turbines, etc.
Where the Razor Edge of Speculation Cuts
While the projections are data-based, several assumptions are less certain:
| Key Categories | Summary |
|---|---|
| Recovery & recycling tech scale | Many of the recycling / recovery technologies are still at pilot or R&D level. Expectations that they will scale rapidly, cheaply, and environmentally clean are optimistic. |
| Post-consumer collection and sorting | The volumes of scrap rely on efficient collection, dismantling, sorting. In many regions, these systems are weak or non-existent. Smelting loss of magnets (i.e. lost REEs) is common. |
| China’s role / transparency gap | China dominates mining & refining; it does not always issue detailed forecast data. The McKinsey model must make assumptions (often conservative) about Chinese output, quotas, export/investment policy. |
Slippery Slopes of Messaging
Some of the media narratives gloss over the difference between potential scrap supply and economically recoverable supply. There’s also a tendency to present recycling as a near-term fix, rather than a necessary but partial supplement. Terms like “bridge” or “supplement” are more accurate than words like “solution” or “cure.”
Supply Chain Implications That Matter
Resilience & diversification
Recycling offers Western/other nations a way to reduce dependence on Chinese supply chains and rare earth mining tragedies. Rare Earth Exchanges (REEx) is aware that various agencies in the U.S. federal government are investigating recycling-based sources.
Timeline misalignment
Even at an aggressive ramp-up, recycled supply will lag demand growth for many years. Critical applications (EV motors, wind turbine generators) need predictable, high-purity, consistent REE material.
Material grade & separation
Scrap requires further processing; separation of individual REEs (especially heavy ones like Dy, Tb) is technically nontrivial, and costs may be high.
Bottom Line: Neither Overhyped Nor Underwhelming
Here’s the truth: the McKinsey estimates are credible, the demand growth is real, and recycling is a key lever. But recycling is a marathon, not a sprint. Policymakers, investors, and the media should avoid framing it as a quick fix. The future matters, but what arrives in time will depend on infrastructure, regulation, investment, and technology scaling — not just good intentions.
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