Western Magnet Makers Gain Momentum as China’s Rare Earth Grip Tightens

Western rare earth magnet makers are emerging into the spotlight as geopolitical tensions push governments to rethink their dependence on China, which controls nearly 60% of global rare earth mining and over 90% of magnet manufacturing, according to the International Energy Agency. Magnets made from rare earths are critical for electric vehicles, wind turbines, robotics, artificial intelligence, and military technologies, making them strategically vital.

In response, the U.S., European Union, and Australia have stepped up efforts to build domestic “mine-to-magnet” supply chains, channeling funding into new factories, processing facilities, and downstream manufacturing. The U.S. and Europe are expected to become the fastest-growing markets for rare earth magnet production over the next decade, driven by industrial policy and national security concerns.

Companies such as Neo Performance Materials are already expanding capacity. Neo recently opened a magnet plant in Estonia, seen as a cornerstone of Europe’s strategy to cut reliance on China. The facility is expected to produce 2,000 metric tons this year and scale up to 5,000 tons, tapping into a global market projected to grow from 250,000 tons to 600,000 tons over the next decade.

In the U.S., growth is being fueled by government backing. Vulcan Elements received a $620 million federal loan from the Department of Defense to accelerate domestic production, reflecting Washington’s view that magnets are foundational to advanced manufacturing and defense capabilities.

Europe is following a similar path through the Critical Raw Materials Act, which targets 40% domestic supply by 2030. Analysts estimate U.S. magnet capacity could expand nearly sixfold by 2036, while Europe’s could more than triple over the same period.

Despite the momentum, skepticism remains. Industry leaders acknowledge that China’s entrenched ecosystem and scale advantage will be difficult to replicate quickly. Still, as demand for energy-efficient motors and advanced technologies continues to rise, Western magnet makers are finding themselves at the center of a fast-growing, strategically important market—one that policymakers are increasingly determined to nurture.