As the energy transition accelerates, global demand for REEs is set to surge, raising major concerns around supply chain stability and geopolitical risks.
Magnet REEs Demand Set to Triple as EVs and Wind Power Take Off
A McKinsey report reveals that global demand for magnetic rare earth elements is projected to triple—from 59 kilotons in 2022 to 176 kilotons by 2035. This sharp rise is driven by booming electric vehicle adoption and the rapid expansion of wind power projects.
Neodymium (Nd) and praseodymium (Pr) form the core of REE magnets, while dysprosium (Dy) and terbium (Tb) are added to enhance performance in extreme conditions. Although magnetic REEs make up only 30% of REE volume, they account for over 80% of market value.
The demand surge is outpacing efforts to substitute REEs with copper coil magnets. Without sufficient supply, the world could face a 60-kiloton shortage by 2035—roughly 30% of projected demand.
The energy transition will likely lead to a surge in demand for magnetic
rare earth elements, with market balance tied to mining quotas in China
China’s REE Dominance: A Double-Edged Sword
China currently controls over 60% of global REE mining and more than 80% of refining. This dominance in the REE supply chain poses a major challenge for other countries. Light REE mining and refining are expected to remain concentrated in China through 2035 unless other regions ramp up production significantly.
Heavy REEs, critical for wind turbines, EVs, and robotics, are mostly mined in the Asia-Pacific region but still primarily processed in China. As a result, countries worldwide are scrambling to develop local REE supply chains. But even with rising investments, most current pipelines are unlikely to meet near-term demand.
Trade Tensions Trigger Rare Earth Supply Shocks
In April 2025, Beijing imposed export restrictions on several rare earth products in response to U.S. tariffs and tech restrictions. This caused rare earth magnet exports to the U.S. to plummet, disrupting global supply chains and forcing automakers outside China to partially suspend production.
However, following new trade agreements in June, shipments rebounded sharply. Reuters reported that China’s exports of rare earth magnets to the U.S. jumped 660% month-over-month in June to 353 metric tons. Yet, global export levels remained 38% lower compared to the same month in 2024, showing the lingering effects of supply disruption.
America’s Untapped Rare Earth Potential Could Shift Global Dynamics
The U.S. Geological Survey (USGS) estimates that the United States has 3.6 million tons of measured and indicated rare earth resources. They are primarily in California, Alaska, Wyoming, and Texas. Canada boasts an even larger potential, with more than 14 million tons of identified REE resources, spread across Ontario, Quebec, and the Northwest Territories.
The only active rare earth mine in the U.S. is located at Mountain Pass, California, operated by MP Materials. In 2024, it produced approximately 45,000 tons of REO (rare earth oxide) concentrate, valued at $260 million. However, the ore is still mostly shipped to China for final processing, highlighting a critical gap in domestic refining capacity.
In southeastern U.S. states like Georgia and North Carolina, monazite—a phosphate mineral rich in rare earths—is being recovered as a byproduct from heavy mineral sands. Companies like Energy Fuels and Ucore Rare Metals are exploring new separation facilities and pilot-scale processing plants to close the refining gap and build end-to-end domestic REE supply chains.
Meanwhile, Canada has over 20 advanced rare earth projects in development, with several aiming to become commercial by the late 2020s. Notably, Vital Metals began small-scale production at its Nechalacho project in the Northwest Territories in 2021. Also Appia Rare Earths & Uranium Corp. is advancing its Alces Lake project in Saskatchewan.
Together, these efforts mark a strategic push by North America to reduce dependency on China. However, challenges remain, including long permitting timelines, environmental review hurdles, and the high cost of separating and refining REEs domestically.
World Mine Production and Reserves
Rare Earth Market Forecast: Strong Growth, High Volatility
According to Mordor Intelligence, the global rare earth metals market is expected to grow from 196.63 kilotons in 2025 to 260.36 kilotons by 2030, at a 5.8% CAGR. The magnet application segment will lead this growth with a forecasted CAGR of 8.02%, thanks to the rising demand for NdFeB magnets in EV motors and wind turbines.
Despite the promising outlook, market volatility is expected to persist through 2025. As manufacturers adapt, many are redesigning products to minimize REE use where possible, while governments are providing financial support. Since 2020, the U.S. Department of Defense has committed over $439 million to strengthen domestic REE supply chains.
Securing the Future: Time to Diversify the REE Supply Chain
The race is on to reduce global reliance on China for rare earths. Countries must invest in domestic mining, develop recycling infrastructure, and support technological innovation to ensure a steady, sustainable supply of REEs. Regulatory reforms and international collaboration will be key to overcoming bottlenecks.
Recycling Rare Earths
Given long mine development timelines and environmental concerns, recycling offers a fast-track solution to strengthen REE supply chains. By recovering REEs from used electronics, industrial equipment, and EV motors, countries can reduce import dependence and close supply gaps.
While large-scale recycling systems are still developing, they represent a sustainable and cost-effective way to boost local supply, especially for high-value magnets.
As the energy transition speeds up, rare earth elements are essential. In the future, ensuring resilient supply chains will be critical to advancing clean energy, digital technology, and national security.
