China’s near-complete domination

Neodymium magnets are key to the global debate over the supply of rare earth metals. There are five key steps in the rare earth supply chain prior to the production of permanent magnets:

rare earth mining/extracting rare earths
rare earth processing into carbonates
separating carbonates into individual rare earth oxides
reduction of the oxides into the individual rare earth metals and alloying the metals.

Sintered magnets, which account for about 90% of the market and are far more magnetic than their cheaper bonded counterparts, are produced by compacting the powdered alloy into a solid mass by vacuum pressure without melting it to the point of liquefaction.

According to the BIS report, “China dominates all steps of the global NdFeB magnet value chain. In 2020, China controlled about 92% of the global NdFeB magnet and magnet alloy market. China also dominated the upstream value chain steps, controlling about 58% of the rare earth mining market, 89% of the oxide separation market, and 90% of the metallization market. China controls an even higher percentage of the heavy rare earth mining market, including dysprosium and terbium, which are critical for high-performance NdFeB magnets. China’s dominant position in the global NdFeB magnet value chain enables it to set prices at levels that can make production unsustainable for firms operating in market economies.”

China is the only country with operations in all steps of the neodymium magnet value chain, including upstream (mining, carbonates production, and separation to oxides) and downstream (metal refining, alloy production, and final magnet production) markets.

In other words, if ever there was a case of a country obtaining a near-global monopoly in a crucial manufacturing supply chain, China’s grip on neodymium magnets is it.