Rare Earth Magnets Have Become a New Battlefield in the Global Power Struggle

In August, the EU's imports of magnets from China increased by 21%, while imports from the United States decreased by 5%. This highlights the growing dependence of Europe on Chinese magnets.

New Western magnet factories are being built in the United States, Canada, and Europe, but experts warn that it may take several years to weaken China's dominant position.

The resource security of rare earth magnets is a problem that the world is desperately trying to solve. This is mainly due to the increasing importance of rare earths in electronics, defense, automobiles, and other fields.

Over the years, countries have been seeking ways to ensure access to these important resources. However, currently, 90% of the oil supply is in China's hands, and the relationship between China and the United States and other countries has recently not been ideal. Despite the best efforts, many countries' demand for rare earths still relies on Beijing. Now, this situation may be beginning to change.

Rare earth magnets are more important than ever before.

Today, almost every advanced country desires rare earth magnets because they can provide extremely powerful magnetic force in compact sizes, enabling the production of efficient motors and miniaturized components. This allows them to power basic systems in electric vehicles, wind turbines, smartphones, medical equipment, and defense equipment.

Magnets have unique properties, such as heat resistance, which makes them even more important in applications where performance and precision are crucial. Therefore, as the global industry shifts towards electrification and automation, rare earth magnets have become a strategic asset, and supply chain control is increasingly regarded as a national security issue.

China has once again controlled approximately 80% of the production of rare earth magnets. In total, the country produces over 200,000 tons of magnets annually, accounting for the vast majority of global supply. In contrast, the total production in North America and Europe is less than 2,000 tons, while Japan and Vietnam produce about 25,000 tons.

Until about six months ago, the situation of these magnets being supplied from China to the rest of the world was still good. Subsequently, Beijing decided to stop exporting electric vehicles to some major trading partners, including the United States and the EU, which was clearly a warning against the US imposing tariffs on Chinese electric vehicles. Since then, China has allowed limited exports, but still maintains stricter controls to strengthen its geopolitical influence.

Now, the latest data shows that the EU's purchases of rare earth magnets increased in August, while imports from the United States decreased. According to Bloomberg, this indicates concerns about resource security, as European countries are facing the most severe pressure from a global shortage of magnet supply.

At the same time, analysts warn that the intensification of trade tensions may further endanger the acquisition of these key materials, potentially undermining Europe's green technology goals and weakening its industrial competitiveness.

Overall, China's exports to the European Union increased by 21% in August, reaching 2,582 tons. Meanwhile, the shipment volume to the United States decreased by 5% month-on-month, dropping to around 590 tons. The data shows that so far this year, the amount of magnets imported by the EU from China is three times that of the United States. Experts say this highlights the greater changes in the global supply pattern.

At present, China's dominant position in the rare earth magnet sector is expected to continue. According to The New York Times, the United States is trying to catch up with this Eastern country. However, despite these new efforts, the vast majority of the magnet supply in the world still comes from China's refineries.

Currently, there are four domestic magnet factories in the United States nearing completion. Meanwhile, in neighboring Canada, New Performance Materials Company has just launched a large factory in Narva, Estonia. The capacity of this factory is almost twice that of Europe and the United States, and could reach 5,000 tons. However, The New York Times' report also points out that a complete transformation will take several years.

North America and Europe purchase nearly 40,000 tons of rare earth magnets each year. Therefore, establishing magnet factories in the United States and some other countries seems to be a way out to break free from China's predicament.

However, China's dominant position is rooted in decades of investment and almost complete control over rare earth processing. It manufactures most of the refining equipment in the world and employs almost all the professional technicians. Some analysts say that to completely break free from this constraint will take several years or even ten years.