Rare earths industry faces new scramble for resilience amid China’s export controls

Rare earths sit at the heart of modern industry, yet their real vulnerability lies less in geology than in geography. They are used in electronics, electric vehicles, industrial motors, wind turbines, aerospace and defence, and magnets account for more than a third of demand by volume while representing over four-fifths of market value, according to Evalueserve’s Anshuman Saini and Rahul Arora.

That concentration is what makes the sector so exposed. The International Energy A...

gency says China accounts for about 60% of mined production of magnet rare earths and more than 90% of refined output, while other recent industry reporting has placed China’s share of separation, refining and magnet-making at similarly overwhelming levels. Export controls and supply disruptions have only sharpened concern that a large slice of downstream production outside China could be vulnerable if restrictions are fully enforced.

The consequence is a push across industry and policy circles to think beyond simply boosting raw supply. Evalueserve argues that resilience will come from a broader portfolio of responses: reducing material intensity, recycling more scrap, securing alternative projects, regionalising supply chains and, where possible, replacing rare earths altogether.

The most immediate gains are likely to come from efficiency. Magnet thrifting, grain boundary diffusion and newer motor designs can lower the amount of heavy rare earths needed without sacrificing performance. Evalueserve says several of these technologies are already commercially proven, with implementations spanning companies such as Bajaj Auto, Simple Energy and Sona Comstar.

Recycling is moving from a secondary option to a strategic source of supply. Hydrometallurgical recovery and magnet-to-magnet recycling methods, including hydrogen processing of magnet scrap, are advancing as manufacturers look to end-of-life magnets and production waste as feedstock. Evalueserve says commercial facilities are already emerging in Europe and North America.

A third route is to secure alternative projects and processing capacity outside the traditional centres of the market. In the United States, Phoenix Tailings is scaling rare earth metal production and recovery from industrial wastewater, while Ucore is building separation capacity and Aclara is using AI-enabled digital twins to accelerate heavy rare earth processing. In Australia, Arafura is advancing its integrated Nolans mine and processing project.

Regionalisation is also gathering pace as governments seek to build domestic and regional ecosystems. Europe has commissioned a major permanent magnet facility in Estonia, India is backing a home-grown permanent magnet manufacturing base and South Korea is planning a sintered magnet plant through a partnership with the US.

Longer term, substitution may reduce dependence on rare earths in some applications. Ferrite-based motors, reluctance architectures, iron-nitride magnets and software-defined motor platforms all offer potential, but most remain at an early stage. Evalueserve says most of the substitution technologies it reviewed are still pre-commercial, although ferrite-assisted synchronous reluctance motors have reached near-commercial demonstration.

The central message is that resilience will not come from a single fix. As China tightens its grip on export controls and the strategic value of rare earths rises, manufacturers and policymakers are being forced towards overlapping solutions that balance immediate efficiency gains with recycling, new processing capacity, regional supply hubs and eventual material substitution.

Source: Noah Wire Services