The global rare earth magnet supply chain is under increasing scrutiny, prompting exploration of alternative sourcing and production strategies. This comes amid rising demand and geopolitical factors influencing the availability and cost of these critical materials. Heavy Industries Minister H D Kumaraswamy has recently highlighted India's commitment to securing its rare earth magnet supply through a multi-pronged approach.
Rare earth magnets, particularly neodymium-iron-boron (NdFeB) magnets, are essential components in various high-tech applications. These include electric vehicles (EVs), wind turbines, consumer electronics, medical equipment, and defense technologies. The growing demand for EVs and renewable energy sources is significantly driving the need for these magnets. The global rare earth magnet market was valued at USD 19.5 Billion in 2024 and is projected to reach USD 40.5 Billion by 2034, exhibiting a compound annual growth rate (CAGR) of 7.7% during the forecast period.
Currently, China dominates the rare earth element (REE) market, controlling over 70% of global REE production and over 90% of refining capacity. This concentration poses risks to other nations, including supply chain disruptions and price volatility. China's recent imposition of stricter export controls on certain rare earth elements and finished magnets has further intensified concerns about supply security. The revised framework demands detailed end-use disclosures and client declarations, extending the clearance process to at least 45 days, leading to delays and tightening global supply chains.
To mitigate these risks, countries worldwide are exploring diversification strategies. Minister Kumaraswamy has emphasized that India is actively seeking alternative sources for rare earth minerals, including Japan and Vietnam. He also mentioned that one Hyderabad-based company has promised to deliver 500 tonnes by the end of the year. This diversification effort is crucial in the interim, as establishing domestic production capabilities will take time.
India is also taking steps to boost its domestic rare earth magnet production. The government plans to roll out an incentive scheme to subsidize domestic production of rare earth magnets within 15-20 days. Consultations are underway to determine the specific amount of the subsidy, and if the total incentive exceeds ₹1,000 crore, the scheme will be sent to the Union Cabinet for approval. This scheme aims to encourage investment in processing facilities that can convert rare earth oxides into usable magnets. Indian Rare Earths Ltd, a public sector unit, currently holds sufficient rare earths to produce 1,500 tonnes of magnets.
Several Indian companies have presented plans to the government to establish domestic magnet supply chains. These companies include Midwest Advanced Materials, Entellus Industries, and Indian Rare Earths (IREL). Midwest Advanced Materials, for instance, plans to produce 500 tonnes per annum and forecasts the ability to produce custom-made rare earth magnets by the end of 2026.
Beyond geographical diversification, research into alternative materials and technologies is also gaining momentum. Some promising alternatives to rare earth magnets include ceramic magnets, graphene-based technologies, and aluminum alloys. Recycling end-of-life magnets is another avenue being explored, with the potential to recover valuable rare earth elements.
The push for diversified rare earth magnet supplies reflects a broader trend towards securing critical mineral supply chains. Governments and companies are recognizing the strategic importance of these materials for economic and national security. By exploring various options, including alternative sourcing, domestic production, and technological innovation, countries can reduce their reliance on single suppliers and build more resilient and sustainable supply chains for the future.
As Minister Kumaraswamy’s efforts indicate, a multi-faceted approach is essential to address the challenges and opportunities in the rare earth magnet market. This includes government support, industry collaboration, and a focus on innovation to ensure a stable and secure supply of these critical materials for the long term.
