Rare earth magnet makers are suddenly finding themselves in the spotlight as Western countries rush to build their own supply chains and cut their ties with China. It’s been a wild year of supply squeezes and tariff threat. Now the magnet manufacturers are right at the center of the geopolitical storm between the U.S. and China.
These magnets are not something used in one or two products but instead they are packed into electric vehicles, wind turbines, smartphones, medical equipment, AI systems, and precision weapons. Pretty much anything that converts electricity into motion needs them to work.
Which is why the U.S., European Union, and Australia are throwing serious money at the problem. They are building factories, backing new plants, and ramping up processing capacity. The goal is simple: break China grip on the mineral market.
Analysts think the U.S. and Europe will become major players in rare earth magnet production over the next decade, though plenty of experts are skeptical that the West can actually escape China’s orbit anytime soon.
Rahim Suleman, CEO of Canadian company Neo Performance Materials, put it bluntly: “Frankly, we were the solution to the problem that the world didn’t know it had.”
He explained that the demand for magnets isn’t tied to any single industry. “The end-market is growing from the point of physics, not software, so therefore it has to grow in this way. And it’s not dependent on any single end market, so it’s not dependent on automotive or battery electric vehicles or drones or wind farms. It’s any energy-efficient motor across the spectrum,” Suleman said, pointing to booming sectors like robotics.
Neo just opened a rare earth magnet factory in Narva, Estonia, basically sitting on Russia’s doorstep. European officials are treating this plant like a big deal. EU industry chief Stéphane Séjourné showed up to an event in early December and called it “a high point of Europe’s sovereignty.”
Suleman says the Estonian facility should hit 2,000 metric tons of rare earth magnets this year, then scale up to 5,000 tons and beyond. He broke down the numbers: “Globally, the market is 250,000 tons and going to 600,000 tons, so more than doubling in ten years. And more importantly, our concentration is 93% in a single jurisdiction, so when you put those two factors together, I think you’ll find an enormously quick growing market.”
That single jurisdiction he’s talking about? China controls nearly 60% of the world’s rare earths mining and over 90% of magnet manufacturing, according to the International Energy Agency. That’s a ridiculous amount of control for one country to have over such a critical resource.
But things are starting to shift. A recent report from consultancy IDTechEx predicted that rare earth magnet capacity in the U.S. will grow nearly six times by 2036. The Department of Defense is backing this expansion with strategic funding, and midstream activity is picking up.
Europe’s looking at a 3.1 times growth over the same period, helped along by the EU’s Critical Raw Materials Act. That legislation aims to get domestic production up to 40% of the region’s demand by 2030.
John Maslin runs Vulcan Elements, a rare earth magnet producer based in North Carolina. He told CNBC the company is trying to scale up as fast as possible “so that this fundamental supply chain doesn’t hold America back.”
Vulcan Elements just got a massive boost from the Trump administration last month. The company received a $620 million direct federal loan from the Department of Defense to support domestic magnet production.
Maslin explained why this matters: “Rare earth magnets convert electricity into motion, which means that virtually all advanced machines and technologies—the innovations that shape our daily lives and keep us safe—require them in order to be operational.”
He went further: “The need for high-performance magnets is accelerating exponentially amid a surge in demand and production of advanced technologies, including hard disk drives, semiconductor fabrication equipment, hybrid/electric motors, satellites, aircraft, drones, and almost every military capability.”
Wade Senti, president of Advanced Magnet Lab in Florida, thinks innovation is the only way to make alternative supply chains work. “The demand for non-China sourced rare earth permanent magnets is skyrocketing,” Senti said.
But there’s a catch. “The challenge is can United States magnet producers create a fully domestic (non-China) supply chain for these magnets. This requires the magnet manufacturer to take the lead and bring the supply chain together – from mine to magnet to customers,” he added.
The reality is that building a “mine to magnet” supply chain from scratch is incredibly difficult. China’s been perfecting this for decades, and they’ve got the infrastructure, expertise, and scale that Western countries are only now starting to develop. Whether the U.S. and Europe can actually pull this off remains to be seen, but the money and political will are finally there.
