Neodymium

Rare Earth Magnets Explained

Information only, not investment advice. This guide explains how the rare earth industry works; it does not recommend any company or security.

By REE Stocks. Sources checked Oct 10, 2026.

Stacked nickel-plated neodymium block magnets beside a ring magnet on a dark slate surface. — Illustration, not a photograph of a real site.

Rare earth magnets are permanent magnets made by alloying rare earth metals with iron or cobalt, and they're the strongest type of magnet sold commercially. Most are neodymium-iron-boron (NdFeB). A smaller group uses samarium and cobalt.

Cordless drills, electric bikes and phones often hold a small, very strong magnet of this kind. Electric car motors and wind turbines use far more, and that demand is the single biggest reason people care about rare earths. The US Geological Survey lists magnets as the estimated leading global end use of rare earths in its 2026 rare earths summary.

What are rare earth magnets?

A rare earth magnet is a permanent magnet, meaning it stays magnetic without any power supply. The rare earth part gives it far more pull for its size than an ordinary iron or ceramic magnet. Engineers use that extra pull to build smaller and more efficient motors and generators.

The metals involved are a handful of the 17 rare earth elements. Our guide on what are rare earth elements lists the whole group and what each one does. Magnet makers rely mainly on four of them: neodymium, praseodymium, dysprosium and terbium.

What is the difference between NdFeB and samarium-cobalt magnets?

NdFeB and samarium-cobalt (SmCo) are the two families of rare earth magnets. NdFeB is the more common of the two and is stronger at normal temperatures, so makers can shrink parts or get more output from the same size. The US Department of Energy notes that this edge holds up to about 180°C.

SmCo magnets resist losing their magnetism at higher temperatures, which suits them to hot applications where weight is a secondary concern. In 2022, US magnet making was still mostly limited to SmCo, apart from one recycler, according to the Department of Energy's 2022 magnet supply chain assessment.

NdFeB magnets also come in two forms. Sintered magnets are pressed from powder and baked, and they're the stronger type. Bonded magnets hold powder together with plastic resin, so they can take complex shapes. The DOE puts sintered magnets at about 93% of the NdFeB market.

Why are dysprosium and terbium added to magnets?

Dysprosium and terbium are heavy rare earths added to NdFeB magnets so they keep working when hot. A plain NdFeB magnet starts to lose strength as it heats up. Replacing some neodymium and praseodymium with dysprosium or terbium improves resistance to demagnetization above about 120°C.

Dysprosium has been one of the priciest rare earths for years, so magnet makers use as little of it as they can. Techniques like grain boundary diffusion let them hit a given heat rating with less of it. The DOE table below shows how dysprosium content climbs with the temperature rating.

Grade suffix	Max operating temperature	Approx. dysprosium content (weight)
None	80°C	Under 0.5%
M	100°C	1.4%
H	120°C	2.8%
SH	150°C	4.2%
UH	180°C	6.5%
EH	200°C	8.5% to 11%
AH	220°C	8.5% to 11%

Grades are named by strength, then heat rating. An "N52" magnet is very strong but rated only to 80°C. An "N42AH" is a bit weaker but rated to 220°C.

Where are rare earth magnets used?

Rare earth magnets are used wherever a compact, efficient motor or generator is needed. The DOE lists wind turbines, electric vehicle drives, hard disk drives, phones, speakers, industrial motors, power tools and e-bikes. Defence systems use them too.

Electric vehicles. The DOE expected 90% to 100% of battery and hybrid cars to use NdFeB traction motors by 2025. Each motor typically needs 1 to 2 kg of magnet material, and these hot-running motors use EH and AH grades.
Wind turbines. Direct-drive generators, common offshore, use about 2.7 to 3.2 tonnes of magnet per megawatt of capacity, mostly SH grade.
Electronics. Hard drives and speakers run cool, so their magnets need little or no dysprosium. In the DOE's 2020 figures, consumer electronics made up 29% of global NdFeB demand.
Defence and data centres. The International Energy Agency names both among the users of sintered magnets.

The US National Defense Stockpile also plans purchases of magnet materials. The USGS says its potential acquisitions for fiscal 2025 included 450 tons of NdFeB magnet block, 300 tons of neodymium-praseodymium oxide and 60 tons of samarium-cobalt alloy.

How is a rare earth magnet made?

A rare earth magnet is made in a chain of steps that turns ore into oxide, oxide into metal, metal into alloy and alloy into a finished magnet. Each step is a separate industry, and a company may do only one of them.

Mining and concentrating. Ore is dug up and upgraded into a mixed rare earth concentrate.
Separation. Chemical plants split the mix into individual oxides, such as NdPr oxide.
Metal making. Oxides are refined into metals, usually by electrowinning or sodium reduction. Common magnet feeds are NdPr metal and ferrodysprosium.
Alloy making. The metals are melted with iron and boron, then strip cast on a cooled, spinning drum.
Magnet making. The alloy is milled to a fine powder, lined up and pressed in a magnetic field, then sintered at 1,000 to 1,100°C.
Finishing. Magnets are machined to shape, coated (often with nickel) and finally magnetized.

The DOE estimates the rare earth metals make up over 90% of a magnet's material costs. As a result, NdPr oxide prices drive much of the cost of making a magnet. USGS puts the average NdPr oxide price at an estimated US$69 per kilogram in 2025, up from US$55 in 2024 but well below US$124 in 2022.

Why is rare earth magnet supply outside China so thin?

China leads every stage of the chain, and its share rises at each step closer to the finished magnet. The IEA says China mined around 60% of magnet rare earths in 2024. It did about 91% of separation and refining. Today it makes 94% of sintered permanent magnets, up from about 50% two decades ago.

Plants elsewhere are slow to build because the processing chemistry is complex, and many magnet ores contain radioactive uranium and thorium that few countries can handle. The IEA also flags that planned magnet capacity outside China is notably lower than planned mining and refining capacity.

In April 2025, China added export controls on seven rare earths, including dysprosium and terbium, according to the USGS. The IEA notes those controls also covered related magnets, and that some carmakers struggled to get magnets that spring. China exported 58,000 tonnes of rare earth magnets in 2024. Our guide to China rare earth export controls covers those rules in more detail.

New capacity outside China is coming online slowly. The IEA says new magnet plants began operating in 2025 in the United States (MP Materials) and Estonia (Neo Performance Materials). Others are moving ahead in Korea, Vietnam and Germany.

Why do magnets matter for rare earth companies?

Magnets are the main market that rare earth miners and processors are ultimately selling into. Project studies therefore lean heavily on NdPr and, for some deposits, dysprosium and terbium. A deposit rich in cheap lanthanum and cerium has a much weaker link to magnet demand.

Companies in the sector usually describe themselves by supply chain stage. Some only explore, others mine and sell concentrate, and a few separate oxides, make metal or press magnets. Our rare earth stocks list groups the listed companies by stage and project.

Rare Earth Magnets Explained: frequently asked questions

What are rare earth magnets made of?

Most rare earth magnets are neodymium-iron-boron (NdFeB) magnets. By weight, a sintered NdFeB magnet is roughly 30% rare earth metal, 69% iron and 1% boron, according to the US Department of Energy. The rare earth part is mainly neodymium and praseodymium, sometimes with a little dysprosium or terbium.

Why do some magnets need dysprosium?

Heat weakens an NdFeB magnet. Swapping some neodymium for dysprosium or terbium helps the magnet hold its strength above about 120°C. Electric vehicle traction motors run hot, so they use high-temperature magnet grades.

How much magnet material is in an electric car?

A US Department of Energy report puts it at about 1 to 2 kg of permanent magnet material per electric vehicle motor. Cars also use NdFeB magnets in speakers, sensors and power steering.

Does China make most of the world's rare earth magnets?

Yes. The International Energy Agency says China's share of sintered permanent magnet production has risen from around 50% two decades ago to 94%. New magnet plants outside China have started up. Even so, the IEA says planned magnet capacity outside China is notably lower than planned mining and refining capacity.

What is the most common use of rare earths?

Magnets are the largest use worldwide. The US Geological Survey lists them as the estimated leading global end use of rare earths, although in the United States alone, catalysts are the estimated leading use.