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A Brief Market Analysis of Rare Earth Magnets

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Figure 1: Examples of Rare Earth Magnets

The Critical Importance Of A Rare Earth Magnet

Earth magnets are essential in many critical industries, such as defence, tech, automotive, healthcare, and security. Currently, the US is the second-largest producer of rare earth metals. US market outputs are 38,000 MT, trailing far behind China, the largest rare earth metal producer, whose outputs sit at 140,000 MT per annum.

The US Department of Energy (DOE) has invested billions of dollars to improve its status as a rare earth magnet producer, and the Department of Defense (DOD) is also investing heavily in the sector to establish domestic rare earth magnet production facilities.

In a 2024 MIT Technology Review report, projections indicate that US demand for rare earth magnets will quadruple by 2050. The current global market for rare earth magnets is 184,000 tons per annum. The electric vehicle, tech, and renewable energy sectors drive this significant increase in demand.

rare earth magnets

Figure 2: Raw Rare Earth Metals

What Is A Rare Earth Magnet?

A rare earth magnet is made from one of the 17 rare earth elements. The term “rare earth” is misleading, as the composition elements are not rare. The term is used because it is not found in large concentrated amounts and is often mixed with other components, making it appear rare.

Rare earth magnets are the strongest permanent magnets and perform considerably better than ceramic/ferrite magnets (composed of strontium carbonate and iron oxide) and alnico magnets (composed of aluminium, nickel, and cobalt).

The two most common rare earth magnets are Neodymium, or Neo magnets (Nd-Fe-B) and Samarium Cobalt (SmCo). Neo magnets are composed primarily of neodymium, boron, and iron, and samarium cobalt is composed of samarium and cobalt. Both types are used in computer components, medical devices, satellite systems, and audio surveillance tools, to name a few applications.

Figure 3: Rare Earth Metals Market Size

Rare Magnets Of The Earth Market Insight

Global rare earth magnets consumption is currently at US 10.8 billion, with Adamas Intelligence reports projecting it to reach UD 56.7 billion by 2040. Additionally, prices are projected to increase by a Compound Annual Growth Rate (CAGR) of 3.3%—5.2% over the same period.

This staggering growth potential leads to a considerable rush to secure supply worldwide. In the US, a bipartisan bill was introduced offering tax credits to companies to establish rare earth magnet production plants in the country.

Additionally, several ASX-listed Australian companies have been enlisted to help develop a domestic source of rare earth magnets to supply the US market. Vietnam and Brazil, the 9th and 10th largest rare earth magnet producers, are ramping up their efforts to secure supply.

Figure 4: Rare Earth Metals Mining Locations Across The World

The Bullish Future Of The Rare Earth Magnets Market

Major rare earth magnet players such as American Rare Earths (ASX: ARR) invest heavily in upscaling production. Its flagship Halleck Creek project has an estimated total Joint Ore Reserves Committee (JORC) rare earth resource of 1.43 billion tonnes, which includes roughly 4.7 million tonnes of total rare earth oxides (TREO) with an average grade of 3,309 parts per million.

That being said, the most significant player in the industry remains China Northern Rare Earth High-Tech Co. Ltd. With a current market cap of USD 86.653 billion, it operates the Bayan Obo Mining District in Inner Mongolia, estimated to be the planet’s most abundant source of REEs.

There seems to be no end to the demand for rare earth magnets as global leaders continue to push for cleaner, more sustainable technologies. With demand far exceeding supply, the market looks bullish for investors looking to capitalise on the upward trend.

 

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