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.

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.