Critical minerals value chains – Permanent magnets

Permanent magnets are essential for a clean and digital economy. The development of permanent magnets relies on the increased supply of responsibly sourced critical minerals, making this value chain a priority under the Canadian Critical Minerals Strategy.

Why are permanent magnets important for Canada?

Permanent magnets are essential components of modern electronics used in cell phones, televisions, computers, electric vehicles (EVs), wind turbines, jet aircraft and many other products.

The permanent magnet value chain is heavily dominated by China, which is responsible for the following:

• 60% of mining production
• 85% of oxide production
• 90% of metal production
• 90% of alloy production
• 90% of magnet production

This is why Canada and many of its allies, in addition to industry stakeholders around the world, are looking to diversify sourcing for reliability and sustainability.

With abundant mineral resources, advanced projects and capacity being developed across the entirety of the value chain, Canada is well positioned to capitalize on growing Canadian and global demand for permanent magnets.

Understanding the permanent magnet value chain

The permanent magnet value chain includes several stages required to extract rare earth elements (REEs) from ore, separate them into individual oxides, and turn them into alloys and magnets.

Neodymium (or NdFeB) magnets are the most common type of permanent magnet used globally, having the highest magnetic field per unit of volume. On average, an EV uses between 1 kilogram (kg) and 2 kg of magnets in its motor. New models of wind turbines can use up to 2 tonnes of NdFeB magnets.

Neodymium, praseodymium, dysprosium and terbium are 4 of the key REEs used to create NdFeB magnets.

Global market snapshot

The global REE market is relatively small in terms of volumes of production. In 2022, there were approximately 300,000 tonnes of all total REE oxides produced globally (compared to 22 million tonnes of copper, as an example). Supply and demand dynamics are complicated by the fact that REEs are found and extracted together despite differences in end market for each of them, which causes an oversupply for some REEs.

Adamas Intelligence, a market intelligence firm, estimates that the global demand for the 4 key magnet REE oxides will increase at a compound annual growth rate (CAGR) of 7.1% overall, with much of the growth stemming from the EV and wind power sectors. This is expected to cause shortages from 2023 onwards since supply is expected to grow at a CAGR of 5.1%.

Prices for main magnet oxides, i.e., neodymium oxide and praseodymium oxide, are predicted to increase from US$112 per kg today to US$177 per kg by 2030 and from US$109 per kg to US$169 per kg by 2030, respectively. Further, Adamas estimates that the value of global magnet REE oxide production will increase fivefold by 2040, from an estimated US$10.8 billion in 2023 to US$56.7 billion by 2040.

The Canadian advantage

Canada has some of the world’s largest known reserves and resources of REEs in the world and is host to several advanced exploration projects.

Beyond mining, Canada is also developing capacity in:

• processing and separation
• metal and alloy production
• magnet manufacturing
• recycling of REE magnets

Federal and provincial governments are supporting several initiatives along the permanent magnets value chain, including:

• processing and separation operations in Saskatchewan
• Quebec and Ontario-based projects to scale up technology to recover REEs from magnetic waste

NRCan recently completed a 6-year REE research and development program and several process advances were made to improve recoveries and reduce costs. Work under the new Critical Minerals Research, Development and Demonstration Program will build on this progress, address remaining gaps and engage directly with industry.

Canada’s value chain gaps and opportunities

Successful commercial entry into the permanent magnet value chain brings many challenges, including unstable market conditions, high expenses, difficulty in raising private capital, technical specialization required for processing and separation, and environmental considerations related to proper disposal of chemicals as well as radioactive material (uranium and thorium) that may be found with REE deposits.

The mineralogy of most Canadian ore deposits is relatively complex and difficult to concentrate and process, making cost-competitiveness challenges even worse. However, some deposits also contain significant volumes of highly sought after “heavy” REEs, like dysprosium and terbium, which are less commonly found globally.

Public and private investments in downstream EV and traction motor manufacturing facilities in Canada and, more broadly, North America, should help incentivize and attract more investments into upstream and midstream projects. In addition, Canada remains a good option for foreign investment due to factors like its high environmental, social and governance standards, widely available clean and relatively cheap electricity, and highly regarded innovation ecosystem.