Rare earth magnet production outside Asia gearing up

Rare earth magnets, which are essential for the world’s net-zero transition by 2050 through their use in electric vehicle (EV) engines and in offshore wind turbines, attracted increasing attention in 2023.

Before Christmas, China prohibited the export of rare earth production technology and machinery, formalizing existing export restrictions.

In December, the US Congress suggested to introduce tax credits for domestic rare earth magnet production.

Existing US regulation includes the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act (IRA), both signed in 2022.

The IRA provides tax incentives to source critical materials domestically within the US or from free trade partners, while the BIL is a source of investment into the supply chain.

China is currently responsible for approximately 90% of the global rare earth magnet production, the US Department of Energy (DOE) estimates, with the rest coming mainly from Japan.

Such measures find support in the industry, in addition to direct investments for magnet makers.

E-VAC Magnetics – US subsidiary of German privately-owned magnet manufacturer VAC Group – has concluded an agreement with the US Department of Defense (DOD), which will provide $94.1 million for the purchase and installation of manufacturing equipment, technical infrastructure and the engineering of production lines.

“VAC is thankful for the support of the US DOD… and encouraged by the availability of additional investment incentives through the BIL and IRA,” a VAC spokesperson told Fastmarkets.

The VAC spokesperson added that tax credits for rare earth magnet manufacturing are critical to ensure that US-produced magnets remain competitive in the global market.

“Fresh capital is needed to ensure that the industry is able to close the gap compared to the already mature investment and industry base in Asia,” a spokesperson for UK magnet maker GKN Powder Metallurgy – now a part of UK-listed company Dowlais – said.