The Rare-Earth Supply Chain Explained

Rare-earth elements are a group of seventeen metals that includes neodymium, praseodymium, dysprosium and terbium. Despite the name, they are not especially scarce in the earth's crust — the challenge is that they are rarely found in concentrated deposits and are difficult and costly to separate and refine.

In electric motors, the relevant use is permanent magnets: neodymium-iron-boron (NdFeB) magnets, often with dysprosium added for heat resistance, deliver very high magnetic strength in a small volume.

While rare earths are mined in several countries, the processing and refining stage — turning ore into usable magnet material — is heavily concentrated. Widely cited figures put China's share of global rare-earth processing at roughly 90%.

This concentration exists because refining is capital-intensive, environmentally demanding and was built up over decades in one region while others stepped back. Rebuilding processing capacity elsewhere takes years.

Because of this concentration, policy decisions in one country ripple through the entire global motor industry. Rare-earth export controls tightened from April 2025 onward, moving from a trade-policy topic to a direct impact on production.

Publicly reported consequences included magnet shortages that contributed to a production halt at a North American vehicle assembly plant, and accelerated efforts by automakers and suppliers to develop rare-earth-free motor options.

Reporting through 2025 indicated that a large share of global manufacturing executives were actively reshoring or de-risking supply chains, with rare earths frequently cited as a critical mineral of concern. Several major automakers and suppliers announced rare-earth-free motor programmes.

The strategic responses fall into a few buckets: diversifying rare-earth sources, stockpiling, recycling magnets, and — most fundamentally — designing motors that do not need rare-earth magnets at all.

Ferrite-based permanent magnet motors sidestep the rare-earth supply chain entirely, because ferrite uses iron oxide rather than rare-earth elements. The engineering challenge is achieving comparable efficiency, which modern electromagnetic design addresses.

For a general overview of that field, see the rare-earth-free motor technology guide; for a product perspective, see the rare-earth-free motors page or get in touch.