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Glossary | Rare Earths, Magnets & Motors
What are Rare Earths, Magnets & Motors?
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Rare earth elements (REE) comprise a group of 17 chemically similar metals that share distinctive magnetic, luminescent, and catalytic properties. They include the 15 lanthanides, together with scandium and yttrium, which exhibit comparable chemical behaviour and typically occur in the same geological deposits.
REE are generally divided into two subgroups by atomic weight and properties:
Light rare earth elements (LREE): lanthanum, cerium, praseodymium, neodymium, samarium, and promethium.
Heavy rare earth elements (HREE) : europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium, together with scandium and yttrium.
Despite their name, these elements are not especially scarce in the Earth's crust; the challenge lies in extracting, refining and separating them economically, as they are chemically very similar.
Rare earths, magnets & motors role in the energy transition
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Rare earth elements (REE) play a vital role in modern technology and clean energy systems. They are essential for producing high-performance permanent magnets used in electric vehicle (EV) motors, wind turbines, and a wide range of consumer electronics.
The role of REEs in EV performance
For the electric mobility and renewable energy sectors, a select group of REEs are especially critical. Neodymium (Nd) and praseodymium (Pr) – often collectively referred to as NdPr form the essential building blocks of neodymium iron boron (NdFeB) permanent magnets used in nearly all high-efficiency EV traction motors.
Dysprosium (Dy) and terbium (Tb) are added in small quantities to improve high-temperature magnet performance, which is crucial in compact, high-power motors. Samarium (Sm) is used in samarium cobalt (SmCo) magnets for specific high-performance or very high-temperature applications, including aerospace, defence and wind turbines.
These elements are critical for achieving the high torque, efficiency, and range demanded by modern EVs. Without them, motor performance and energy efficiency would be significantly reduced.
Rare earth applications: where do they go?
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Rare earth elements (REE) are used across a wide range of industries, but the fastest-growing and most strategic demand comes from permanent magnets. These high-performance magnets made primarily from neodymium, praseodymium, dysprosium, and terbium underpin technologies central to electrification and digitalisation.
While REEs have long been used in catalysts, ceramics, and glass, magnet production now drives consumption growth and underpins global supply chain attention.
Why are EVs and wind power driving rare earth demand?
Electric vehicle (EV) motors represent the largest growing end use segment. It varies quite by motor design, but typical ranges for a traction motor typically contains between 1 - 2kg of neodymium praseodymium (NdPr) alloy and 50–200g of dysprosium to improve heat resistance.
As global EV production rises towards 40m units per year by 2030, demand for neodymium iron boron (NdFeB) magnets is expected to double. The efficiency, power density, and reliability of permanent magnet motors make them the preferred architecture for most automakers worldwide.
Wind turbines are a major source of demand as well. Modern offshore wind projects increasingly use direct-drive generators that eliminate mechanical gearboxes and rely on permanent magnets for higher efficiency and lower maintenance. Continued growth in offshore capacity across Europe, China, and other regions will significantly increase REE consumption over the next decade.
What other end-use sectors are driving rare earth demand?
In consumer electronics, miniature NdFeB magnets drive speakers, vibration motors, and sensors in smartphones, laptops, headphones, and household devices. Although volume demand is large, the magnet content per unit is small, and market growth has largely plateaued.
Defence is also increasingly important relatively small in volume, but critical in terms of performance requirements and supply security, particularly for high-spec magnet materials. They enable advanced systems such as missile guidance, radar modules, and jet-engine components.
And beyond that, we are seeing emerging demand from automation and robotics, including humanoid systems. The US is likely to play a key role here, with companies like Tesla pushing early deployment, although scale-up will take time. Over the longer term, this could become a multi-million unit market, adding a new layer of magnet demand.
Outside magnet applications, REE continue to serve several industrial and niche uses. Lanthanum and cerium are key inputs for fluid catalytic cracking catalysts used in oil refining a mature and stable market while cerium oxide remains vital for glass polishing and ceramics.
By 2030, permanent magnets are projected to account for more than 95% of total NdPr demand and nearly 90% of dysprosium and terbium consumption, cementing their role as the central engine of the global rare earth economy.
Rare earths supply chain: from mine to magnet
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The rare earth supply chain is one of the most concentrated and opaque among all critical materials, dominated by China at nearly every stage, from mining and refining to magnet production.
Global mining supply and China’s dominance at the source
China accounts for ~70% of global rare earth ore output, sourced primarily from two key deposits:
The Baiyun mine in Inner Mongolia the world's largest and most diverse rare earth deposit.
A cluster of ion adsorption clay deposits in southern China that yield valuable heavy rare earth elements (HREE).
Outside China, notable production occurs in Australia, the United States and Myanmar. Australia’s Lynas Rare Earths operates the high-grade Mount Weld mine, while MP Materials runs the Mountain Pass mine in California, the only significant US source of rare earths. Myanmar contributes intermittent, largely unregulated HREE supply that remains contentious and environmentally damaging.
Separation challenges and China’s near-total control
Although mining marks the start of the supply chain, the primary bottleneck lies in separation and refining, where China’s control is near total. After extraction, ores are crushed, leached, and chemically processed to separate the 17 rare earth elements into their individual oxides an acid and solvent-intensive process that produces substantial hazardous and radioactive waste.
China processes more than 85% of global rare earth output. Lynas ships Australian concentrate to Malaysia for refining, while MP Materials has started processing material at its separation plant , which will be further used in its upcoming magnet manufacturing facility in Texas.
Progress outside China remains slow, as separation is the most technologically demanding and environmentally challenging stage of the chain, although progress has accelerated following the introduction of trade restrictions by China in 2025.
Magnet production as the final, high-value stage
Magnet manufacturing represents the final and most value-added step. Neodymium iron boron (NdFeB) magnets are made by combining rare earth alloys with iron and boron through precision sintering or bonding. China produces approximately 94% of the world’s permanent magnets, despite mining only around 70% of the ore, reflecting its vertical integration and metallurgical capacity. Capacity outside China remains limited, producers such as Vacuumschmelze in Germany and Shin-Etsu in Japan serve niche markets, while capacity in the US is small but expected to grow.
Western automakers, turbine and defence manufacturers are heavily reliant on Chinese supply, the rare earth magnet chain remains strategically critical and highly exposed to geopolitical risk.
Rare earth prices: market dynamics
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Rare earth prices are characterised by high volatility and strong sensitivity to Chinese policy decisions. Because China dominates refining and controls most global exports, its domestic production, trading activity, and regulatory environment effectively determine international pricing.
Benchmark publishes weekly assessments for key compounds such as praseodymium neodymium (NdPr) oxide, dysprosium oxide, terbium oxide, and samarium oxide, typically quoted on an DDP China basis – reflecting China's role as the global price-setting hub.
How have rare earth prices evolved in recent years?
After the steep surge of 2021–2022, driven by pandemic-related supply constraints and expanded electric vehicle (EV) output, rare earth prices corrected sharply through 2023–2024. Oversupply resulting from rapid Chinese production growth coincided with weaker European EV demand and a broader economic slowdown, pushing NdPr oxide values to multi-year lows.
Prices subsequently rallied in 2025 following the introduction of Chinese export restrictions and ex-China premiums have emerged. The market remains fluid, with short-term sentiment often shifting in response to Chinese policy announcements or downstream industrial data.
What drives rare earth price movements?
Several key factors continue to shape price movements:
Chinese production quotas, which regulate both mining and separation volumes, are the primary mechanism for supply control. Any tightening or relaxation of these quotas can move prices quickly.
Downstream magnet demand is equally influential: robust EV and wind turbines manufacturing supports pricing, while weaker automotive or electronics sales create downward pressure.
Inventory levels also play a decisive but opaque role; significant volumes are held in China by state stockpiles and major traders, which may be released strategically to influence prices or commercial negotiations.
How do geopolitics impact rare earth prices?
Geopolitical tensions add an additional layer of volatility. Export restrictions, tariffs, or trade measures in the US, Europe, or Japan can prompt sudden price increases as buyers hedge against supply disruption. In 2025, for instance, China tightened export controls on selected heavy rare earth products ahead of US trade negotiations, lifting short-term market sentiment.
Such developments highlight the sector's structural vulnerability: despite efforts to diversify supply, rare earth pricing remains closely tied to Chinese policy dynamics, industrial demand trends, and international diplomacy.
Rare earths market outlook
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Global demand for rare earth elements (REE) is entering a sustained growth phase, driven primarily by permanent magnet applications within the energy transition economy.
Total consumption is projected to rise from ~190,000t of rare earth oxide equivalent in 2025 to almost 270,000t by 2035, with electric vehicles (EVs) and robotics accounting for the majority of growth.
Demand for permanent magnets particularly those containing neodymium, praseodymium, dysprosium, and terbium will continue to dominate market dynamics as electrification expands worldwide.
Can future supply keep up with growing demand?
Future supply remains less certain. While China retains the capacity to meet rising global demand, geopolitical and trade risks are intensifying. In response, Western governments are investing heavily to develop alternative supply chains.
The US and other Western governments are introducing funding and policy incentives to support domestic mining, separation, and magnet production. However, establishing a non‑Chinese rare earth value chain requires all stages from extraction and chemical separation to magnet fabrication and motor assembly to operate in an integrated, large-scale system.
No Western country has yet achieved full value-chain connectivity. Companies such as MP Materials in the US and Lynas Rare Earths in Australia are advancing projects but remain behind China in refining capability, commercial scale, and downstream integration.
Can recycling become a meaningful source of supply?
Recycling of end-of-life components including hard‑drive assemblies, EV motors, and wind turbine generators offers a potential supplementary source of supply by 2035. Even in optimistic scenarios, however, recycled material is expected to contribute only 7% of total demand, as the extraction, separation, and remanufacturing of magnet materials remain technically difficult and costly.
Can technology reduce reliance on rare earths?
Technological substitution provides limited relief. Rare earth-free motor designs, such as induction systems or ferrite magnet configurations, are commercially viable but sacrifice efficiency, torque, and compactness. Most automakers continue to favour permanent magnet architectures for their superior performance and range.
As a result, global dependence on rare earth magnets and, by extension, on Chinese refining and processing is expected to persist well into the next decade, keeping supply security and diversification at the forefront of industrial and geopolitical strategy.
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Contact UsWhat are rare earth elements used for in EVs?
What are rare earth elements used for in EVs?
In electric vehicles (EVs), rare earth elements (REE) are used mainly in permanent magnet traction motors, which convert electrical energy into mechanical power to drive the wheels.
The magnets made from neodymium, praseodymium, dysprosium, and terbium enable smaller, lighter, and more efficient motors. A typical EV contains ~1–3 kg of neodymium praseodymium (NdPr) alloy and up to 200 g of dysprosium to maintain high‑temperature stability.
REE are also present in auxiliary components such as sensors, infotainment systems, and electric pumps, but their primary use lies in the drivetrain motor, where efficiency and compactness directly influence vehicle range and performance
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