Magnet Rare Earths: The Critical Investment Cluster

Four rare earth elements form the magnet cluster: neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb). These elements are essential for permanent magnets, especially neodymium-iron-boron (NdFeB) magnets used in electric vehicle traction motors and wind turbine generators. Magnet REEs represent the highest-priority investment thesis in rare earths due to strong demand growth, supply concentration, and policy support.

Why Magnet REEs Matter for Investors

Magnet REEs sit at the intersection of three mega-trends: electrification, renewable energy, and industrial policy. EV and wind growth directly drives demand. Geopolitical tension over China's processing dominance creates premium prices and supply-chain restructuring opportunities.

The Four Magnet REEs

Neodymium (Nd)

Neodymium is the primary magnet REE. NdFeB magnets contain 25-35% Nd by weight. Nd dominates EV motor demand. Global production is roughly 60,000-80,000 tonnes per year. Nd-heavy ores (bastnaesite) are concentrated in China, Vietnam, and California (rare in US production).

Investment angles: Miners selling Nd concentrate to separators; separators producing Nd oxide or metal; magnet makers producing NdFeB alloys; indirect exposure via automotive and wind OEMs.

Neodymium full investing guide

Praseodymium (Pr)

Praseodymium typically comprises 10-15% of the NdPr magnet blend. Pr is often inseparable from Nd in industrial practice; they are marketed as "NdPr." Pr supply is less constrained than Nd but is co-produced with Nd in most ores. Pr prices are often 20-30% higher than Nd on a per-kg basis due to lower abundance.

Praseodymium full investing guide

Dysprosium (Dy)

Dysprosium is critical for high-temperature magnet performance. EVs and wind turbines operating at elevated temperatures require Dy-doped magnets. Dy comprises 2-5% of specialty magnet blends but is supply-constrained. Dy is significantly rarer than Nd and carries a premium price (5-10x Nd on per-kg basis).

Dy supply is the tightest bottleneck in the magnet REE complex. New projects addressing Dy scarcity are high-priority and highly watched by investors.

Dysprosium full investing guide

Terbium (Tb)

Terbium is similar to Dy: a high-temperature magnet performance enhancer. Tb is used in niche, high-reliability applications. Tb supply is even more constrained than Dy. Terbium prices are 3-5x higher than Dy on per-kg basis. Tb's investment profile is smaller market but extreme supply constraints.

Terbium full investing guide

The NdFeB Magnet Value Chain

Understanding the supply chain from magnet REE concentrate to final magnet product is critical for evaluating investment targets.

Deep dive into the magnet value chain

Demand Drivers: The EV Boom

Electric vehicle growth is the primary demand driver for magnet REEs. Each EV contains:

• 1-2 tonnes of NdFeB magnets in the traction motor
• Additional magnets in steering systems, compressors, and cabin hardware
• Total REE content per EV: 500g-1kg of Nd/Pr equivalent

Global EV sales reached 14 million units in 2024 and are projected to grow to 25+ million by 2030. This growth is policy-driven through EV subsidies and mandates in the US, EU, and China. Policy continuity risk exists but is low through the next 5-10 years.

Demand Drivers: Wind Energy

Wind turbine generators use magnet REEs to enable higher efficiency and higher power density. Modern large offshore wind turbines can use 200-600 kg of magnets per unit. Global wind capacity additions are 50-100 GW per year. Wind growth is structural and policy-supported.

Supply Concentration and Geopolitical Risk

China controls 60-80% of global magnet REE separation capacity. China also produces 60-70% of global NdFeB magnets. This concentration creates:

• Export control risk: China has historically used export quotas and licenses to restrict supply and manage prices.
• Technology transfer risk: Magnet manufacturing requires proprietary IP. Western manufacturers often struggle with magnet quality parity.
• Strategic stockpiling risk: China and other nations stockpile magnet REEs during supply crunches, further reducing available supply.

These risks create investment opportunities in non-China supply and alternative magnet technologies.

Investment Routes

Risk Factors Specific to Magnet REEs

• Demand cycle risk: EV sales are policy-dependent. A shift in EV incentives could reduce demand growth.
• Technology substitution: Alternative magnets or direct-drive motors with no magnets could reduce REE demand. R&D risk is real but low probability through 2030.
• Chinese dominance: Magnet REE supply-chain restructuring is slow. Western capacity additions face capex and technical hurdles.
• Price volatility: Magnet REE prices spike during supply shocks and crater during demand slowdowns. Capital-intensive producers are vulnerable to downturns.

Key Investment Thesis Points

• Magnet REEs (Nd, Pr, Dy, Tb) face structural demand growth from EV and wind electrification.
• Supply is concentrated, geopolitically sensitive, and faces decade-long capacity buildup.
• Dysprosium and terbium are the tightest bottlenecks. New Dy/Tb supply attracts investor premium valuations.
• Non-China supply development is policy-prioritized. Government subsidies and industrial policy support Western capacity.
• Magnet REE equity investors should evaluate supply-chain position (mining vs separation vs magnet manufacturing) carefully.

Next Steps

1. Review individual element pages: Nd, Pr, Dy, Tb
2. Learn the magnet value chain in detail
3. Screen magnet and downstream companies
4. Build a magnet REE position