Technology innovations driving rare earth magnet market growth

A turbulent year of supply restrictions and tariff threats is driving the strategic reshoring of rare earth magnet production across Europe and North America. In 2025, China will produce 90% of the world's rare earth magnets, critical materials used in electric vehicles, industrial automation, consumer electronics and wind energy applications.

With annual rare earth magnet demand set to almost double over the next decade amidst supply uncertainty, the stage is set for the earth magnet market to evolve.

The expansion of rare earth magnet production outside of China presents growth opportunities for rare earth separation, refining, and magnet manufacturing technologies. IDTechEx's latest report, 'Rare Earth Magnets 2026-2036: Technologies, Supply, Markets, Forecasts', forecasts that global rare earth magnet production will exceed 330,000 tonnes by 2036, as new supply chains emerge across North America, Europe, and Asia.

Technology innovations will be key to supporting new magnet production capacity. A strong focus is being placed on adaptability to diverse feedstocks and economical operation, while retaining high performance characteristics of finished magnet products.

USA and Europe emerge as key growth markets for rare earth magnet production
The USA and Europe are set to become future hubs for rare earth magnet production outside of China. The USA already produces 11% of the world's rare earth oxides and is making strategic moves to expand downstream refining and magnet production capacity.

Europe seeks to compensate for its lack of mature rare earth mining projects by becoming a leader in separation, refining, and recycling. Lower growth is expected in Asia, where mature rare earth supply in Vietnam, Malaysia, Japan and South Korea already exists.

IDTechEx determines that US magnet production capacity will grow 5.9 times by 2036. Rare earth magnet production growth will be turbocharged by a major public-private partnership between the largest domestic rare earth producer, MP Materials, and the US Department of Defense. The partnership will see MP Materials construct a new magnet manufacturing facility and grow overall production capacity to 10,000 tonnes per annum by 2030.

Rare earth magnet manufacturing capacity in Europe is set to grow in line with an emerging domestic midstream. Magnet production capacity in Europe will grow 3.1 times by 2036, as the region strives to meet targets set out by the EU Critical Raw Materials Act, which requires domestic rare earth processing to satisfy 40% of European demand by 2030.

To support this, rare earth separation capacity in Europe is scaling up at pace to supply critical magnet precursor materials. In 2025, Solvay restarted operations at its 4,000 tpa La Rochelle plant in France, while Carester commenced construction of a 1,400 tpa commercial plant, due to be operational by the end of 2026.

 Solvent extraction and liquid chromatography technologies key to rare earth separation
Expansion of rare earth magnet production capacity presents growth opportunities for versatile and scalable rare earth separation technology. In 2025, China processed 88% of global rare earth concentrates into separated oxides - an order of magnitude greater by weight than the next closest producers.

Rare earth separation technologies such as solvent extraction and liquid chromatography will be key to expanding midstream processing capacity outside of China.

Market leaders and emerging players are gravitating towards solvent extraction as the industry standard high-capacity rare earth separation technology, despite high CapEx and OpEx requirements. Solvent extraction uses chemical additives to selectively and sequentially extract rare earths into organic solvents, followed by separation and recovery back into an aqueous phase.

Solvent extraction is widely employed in the mineral processing industry, offering high volume and high throughput rare earth separation suitable for primary and secondary feedstocks. While solvent extraction technology is capital and energy intensive, with high associated operational costs, it remains the mature separation technology to produce rare earth magnet precursors.

Liquid chromatography technology has the potential to disrupt the midstream market by servicing diverse feedstock streams. Liquid chromatography is a solid-liquid separation technique that resolves rare earth salt solutions into high purity fractions (>99.95+%) using a stationary phase, typically composed of silica or ion exchange resin materials.

Liquid chromatography technology is feedstock agnostic, modular and scalable, with lower CapEx requirements compared to incumbent solvent extraction techniques. Moreover, the ability to recover high value heavy rare earths from low concentration sources enables emerging players to generate revenue from conventionally challenging feedstocks, such as mining tailings and recycled waste.

Grain engineering improves performance and lowers cost of neodymium magnets
While upstream technologies focus on increasing rare earth production, downstream magnet manufacturers require technologies that optimize magnet performance and minimize heavy rare earth content. Material costs represent over 55% of total neodymium magnet production costs, with heavy rare earths (dysprosium and terbium) used to improve thermal performance and coercivity valued at over US$250/kg and US$880/kg, respectively.

Grain engineering of NdFeB alloy microstructures is the key to reducing heavy rare earth content while retaining high performance characteristics. Grain boundary diffusion is a method for concentrating heavy rare earths at grain boundaries, increasing coercivity (resistance to demagnetization) without compromising overall magnetic strength.

Grain boundary diffusion can reduce heavy rare earth content required in NdFeB magnets by over 70%, reducing their cost and avoiding associated precursor sourcing challenges. In the future, grain boundary diffusion with light rare earths and other metal sources may be employed to phase out heavy rare earths completely, as well as reduce critical neodymium and praseodymium usage.

Outlook for rare earth magnet technologies by 2036
The successful expansion of rare earth magnet production in the USA and Europe will rely on technology innovations at separation and magnet manufacturing stages. Solvent extraction technology is poised to deliver increased midstream separation capacity in the short- to medium-term, and is well poisoned to service emerging recycled waste feedstocks over the next decade.

Neodymium magnet manufacturing innovations that reduce heavy rare earth demand are also certain to impact the market, benefiting emerging magnet manufacturers in regions with low domestic dysprosium and terbium supply.

Beyond rare earth magnet technology innovations, an upcoming challenge facing the market will be marrying new supply chain capacity with suppliers and customers for products. Strong partnerships and risk sharing between stakeholders will be critical to secure and insulate emerging rare earth magnet supply chains in the future.

IDTechEx forecasts that the rare earth magnet market will grow to reach US$9.2 billion in annual revenue in 2036, as global magnet production surges to meet demand in electric mobility, wind energy, and robotics applications. 

-- Dr. Jack Howley, Senior Technology Analyst, IDTechEx.