Dysprosium (Dy): The Critical Magnet Bottleneck

Dysprosium is the second critical magnet rare earth (after neodymium). Dy enhances high-temperature magnet performance, enabling operation at elevated temperatures in EV motors and wind turbines. Supply is extraordinarily tight; production cannot meet demand growth. Dy scarcity commands the highest premium among all REEs after terbium.

Supply Constraints (CRITICAL)

• Global production: ~8,000 tonnes/year (all forms)
• Processing capacity: China controls 70-80%; non-China capacity minimal
• Scarcity premium: 5-10x price per kg compared to Nd
• Current deficit: Persistent supply-demand gap through 2030

End-Use Demand

• High-temperature NdFeB magnets (95% of demand)
• EV traction motors at 100-150°C operating temperatures require 2-5% Dy doping
• Wind turbines at high-altitude/hot climates need high-temp performance
• Defense and aerospace applications (100% of demand must be met)
• Each EV motor contains 50-200g Dy; demand growth is structural (+10-15% CAGR)

Market Dynamics

• Pricing: $300-600/kg Dy metal (5-10x Nd price)
• Volatility: Extreme; price spikes during supply shocks
• Contract vs. spot: Most Dy traded on long-term contracts; spot prices spike during shortage

Investment Thesis

Dy is THE critical REE supply bottleneck. New Dy separation capacity or magnet REE projects with Dy capability command premium equity valuations from institutional investors.

Investment Priorities

• Companies with Dy separation capacity (or announced projects)
• Dysprosium-focused miners or developers
• Non-China Dy separation plants in development

Key Takeaways

• Dysprosium is the #1 REE supply bottleneck globally
• Structural supply deficit persists through 2030+
• Premium pricing reflects scarcity; highest REE upside
• New Dy capacity = premium valuation; watch project announcements