According to Mining.com, a report by McKinsey & Company predicts that the market for rare earth permanent magnets will expand threefold by 2035 as the energy transition accelerates, posing greater challenges to global supply.
Rare earth permanent magnets are currently the strongest magnets available for use in motors and wind turbine generators. These magnets typically require four rare earth elements as raw materials: neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb). The first two are the main components, while the latter two are additives used in more critical applications to enhance performance.
McKinsey estimates that although they account for only 30% of total rare earth production, rare earths used in permanent magnets represent 80% of the total value of the rare earth market.
Due to its significance in clean energy technologies, global rare earths used in magnets will increase from 59,000 tons in 2022 to 176,000 tons in 2035. McKinsey adds that the main driver of this growth is the strong increase in the penetration rate of electric vehicles, which is outpacing the substitution of copper wire coil magnets for rare earths. Another factor is the rapid development of renewable energy.
At the same time, supply could decrease by up to 30%. Geopolitical instability may exacerbate the shortage of rare earth supplies.
McKinsey warns that although countries around the world are striving to develop their own rare earth supply chains, it will be difficult to diversify the supply chain in the next 5 to 10 years. The long lead time for building new mining and processing facilities, environmental obstacles, and high costs make secondary resources such as recycling increasingly important.
Currently, over 80% of rare earth waste comes from parts in consumer electronics, electrical or internal combustion engine vehicles, all of which use smaller magnets for motors, brakes, and sensors.
However, McKinsey believes that by 2050, the increased use of magnetic rare earth elements in electric vehicles and wind turbines may lead to an expansion of waste sources. Pure electric vehicle drive systems, industrial motors, and wind turbines may generate similar amounts of waste rare earths, thereby providing a new and larger source of magnets that contain a higher proportion of valuable heavy rare earth elements.
McKinsey estimates that there are approximately 40,000 tons of pre-consumer waste rare earths, which come from the design and manufacturing stages of magnets, and approximately 41,000 tons of post-consumer waste rare earths, which come from various end-of-life products.
McKinsey believes that compared to the relatively concentrated distribution of pre-consumer waste rare earths, post-consumer waste rare earths are more geographically dispersed but more difficult to recycle.
McKinsey states that the recycling of post-consumer rare earth elements will require the specialized separation of magnets for further processing, a practice that is not currently adopted in the existing recycling value chain, which focuses on high-value or high-volume materials such as gold and copper or aluminum and steel.
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