Driven by the global energy transition and the rapid growth of electric vehicles, the importance of powerful permanent magnets is increasing daily. These key materials, with rare earth elements at their core, are not only the heart of electric vehicle motors but also an indispensable foundation for defense technology, wind power generation, and electronic equipment. However, as geopolitical tensions escalate, Western countries are actively promoting the self-sufficiency of their rare earth and magnet supply chains, but they are encountering a difficult bottleneck to overcome—the scarcity of heavy rare earth elements such as dysprosium and tereium.
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The urgent need for an independent magnet supply chain
Permanent magnets are crucial components in a wide range of high-end devices and electric motors worldwide. However, due to the West’s long-standing reliance on external supplies, establishing its own supply chain has become paramount amidst rising geopolitical risks. In recent years, processes ranging from rare earth mining and material refining to magnet manufacturing have begun to be integrated into long-term localization plans.
These projects have received strong support from government policies and funding, and there have been successive reports of increased light rare earth refining. However, the heavy rare earth elements, which truly determine the performance and temperature resistance of magnets, remain a key area that is difficult to overcome.
Key bottleneck: Global scarcity of dysprosium and terbium
While dysprosium and terbium are not in high demand in magnets, they play an irreplaceable role, especially in maintaining magnetism in high-temperature environments, which is crucial for the operation of motors and components in electric vehicles. Currently, major rare earth deposits in the West can only provide trace amounts of heavy rare earth elements, which is completely insufficient to support large-scale magnet production.
Market analysis indicates that if the West hopes to establish a stable magnet production system, it will inevitably have to find new sources of heavy rare earth elements from other countries, such as South America, Southeast Asia, or Africa. However, exploration, construction, and mass production all require a significant amount of time, making it difficult to fill this gap in the short term.
Impact on Western countries: Dependence is unlikely to decrease significantly.
There were hopes that new mining and investment would reduce reliance on a single source, but research institutions predict that even by 2030, the West will still need to rely on external supplies for more than 90% of its heavy rare earth demand.
This heavy reliance has already had a concrete impact this year. When export policies tightened, some automakers’ factories immediately had to temporarily shut down due to a shortage of raw materials, further highlighting the fragility of the supply chain.
The natural scarcity of heavy rare earth elements and their soaring prices
Compared to other light rare earth elements used in magnets, the proportions of heavy rare earth elements dysprosium and tungsten in ore deposits are very low. The production of permanent magnets requires a certain proportion of heavy rare earth elements, but the amount of heavy rare earth elements in currently mined rare earth deposits on Earth is less than half of what is needed for magnet manufacturing. This inherent geological limitation makes it difficult to rapidly increase production.
According to data from market research firm Fastmarkets, the current international price of dysprosium oxide is more than three times that of major producing regions, highlighting the extreme shortage of dysprosium oxide in non-major supply areas. If magnet production is to increase in regions outside of China and Japan, the demand for dysprosium oxide will inevitably increase significantly, with annual demand projected to exceed 1,600 metric tons by 2030.
Fun fact: In the past, manufacturing a high-temperature resistant, high-order magnet might have required adding 3% to 10% or even more heavy rare earth elements. However, for every ton of rare earth oxides we mine, typically less than 1% consists of these heavy rare earth elements.
Magnet crisis sweeps the global automotive industry
Electric vehicle motors are highly dependent on permanent magnets, and the instability of rare earth supply poses a serious challenge to the automotive industry. Recent geopolitical disputes have led to supply chain fluctuations, forcing automakers to postpone or reduce production plans.
More importantly, permanent magnets are not only used in electric vehicle motors. They are still widely used in traditional gasoline-powered vehicles, for example, in wiper motors and seat adjustment mechanisms. A shortage of magnets could bring entire vehicle assembly lines to a standstill, impacting far more than just the electric vehicle sector.
Response strategy: Rebuilding non-Chinese supply chains
To diversify risk, Europe and the United States are investing heavily in developing new rare earth sources and magnet processing capabilities, including exploring domestic mineral resources, establishing refining technologies, and strengthening rare earth recycling technologies.
However, these plans are all medium- to long-term initiatives, requiring many years from exploration and investment to actual production. Experts generally believe that it will be difficult to shake the existing dominant supply in the short term, especially in the supply of dysprosium and thallium.
Conclusion
If Western countries hope to truly achieve self-sufficiency in their magnet supply chains, the next step must be to directly address the bottlenecks in heavy rare earth elements. The supply gaps in dysprosium and tereium will be a decisive factor in the stable development of the global electric vehicle, wind power, and defense industries.
With alternative supply sources yet to mature and rare earth-free technologies still needing time to be developed, heavy rare earths will be the next key piece of the puzzle in the global technology race.
Data Source:
- Reuters: The West faces the challenge of scarcity of heavy rare earth elements in its efforts to build an independent supply chain for magnets.
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