In mid-January, a top United States materials company announced that it had started to manufacture rare earth magnets. It was important news—there are no large U.S. makers of the neodymium magnets that underpin huge and vitally important commercial and defense industries, including electric vehicles. But it created barely a ripple during a particularly loud and stormy time in U.S. trade relations.
The press release, from MP Materials, was light on details. The company disclosed that it had started producing the magnets, called neodymium-iron-boron (NdFeB), on a “trial” basis and that the factory would begin gradually ramping up production before the end of this year. According to MP’s spokesman, Matt Sloustcher, the facility will have an initial capacity of 1,000 tonnes per annum, and has the infrastructure in place to scale up to 2,000 to 3,000 tonnes per year. The release also said that the facility, in Fort Worth, Texas, would supply magnets to General Motors and other U.S. manufacturers.
NdFeB magnets are the most powerful and valuable type. They are used in motors for electric vehicles and for heating, ventilating, and cooling (HVAC) systems, in wind-turbine generators, in tools and appliances, and in audio speakers, among other gear. They are also critical components of countless military systems and platforms, including fighter and bomber aircraft, submarines, precision guided weapons, night-vision systems, and radars.
A magnet manufacturing surge fueled by Defense dollars
MP Materials’ has named its new, state-of-the-art magnet manufacturing facility Independence.Business Wire
The Texas facility, which MP Materials has named Independence, is not the only major rare-earth-magnet project in the U.S. Most notably, Vacuumschmelze GmbH, a magnet maker based in Hanau, Germany, has begun constructing a plant in South Carolina through a North American subsidiary, e-VAC Magnetics. To build the US $500 million factory, the company secured $335 million in outside funds, including at least $100 million from the U.S. government. (E-VAC, too, has touted a supply agreement with General Motors for its future magnets.)
In another intriguing U.S. rare-earth magnet project, Noveon Magnetics, in San Marcos, Texas, is currently producing what it claims are “commercial quantities” of NdFeB magnets. However, the company is not making the magnets in the standard way, starting with metal alloys, but rather in a unique process based on recycling the materials from discarded magnets. USA Rare Earth announced on 8 January that it had manufactured a small amount of NdFeB magnets at a plant in Stillwater, Oklahoma.
Yet another company, Quadrant Magnetics, announced in January, 2022, that it would begin construction on a $100 million NdFeB magnet factory in Louisville, Kentucky. However, 11 months later, U.S. federal agents arrested three of the company’s top executives, charging them with passing off Chinese-made magnets as locally produced and giving confidential U.S. military data to Chinese agencies.
The multiple US neodymium-magnet projects are noteworthy but even collectively they won’t make a noticeable dent in China’s dominance. “Let me give you a reality check,” says Steve Constantinides, an IEEE member and magnet-industry consultant based in Honeoye, N.Y. “The total production of neo magnets was somewhere between 220 and 240 thousand tonnes in 2024,” he says, adding that 85 percent of the total, at least, was produced in China. And “the 15 percent that was not made in China was made in Japan, primarily, or in Vietnam.” (Other estimates put China’s share of the neodymium magnet market as high as 90 percent.)
But look at the figures from a different angle, suggests MP Materials’s Sloustcher. “The U.S. imports just 7,000 tonnes of NdFeB magnets per year,” he points out. “So in total, these [U.S.] facilities can supplant a significant percentage of U.S. imports, help re-start an industry, and scale as the production of motors and other magnet-dependent industries” returns to the United States, he argues.
And yet, it’s hard not to be a little awed by China’s supremacy. The country has some 300 manufacturers of rare-earth permanent magnets, according to Constantinides. The largest of these, JL MAG Rare-Earth Co. Ltd., in Ganzhou, produced at least 25,000 tonnes of neodymium magnets last year, Constantinides figures. (The company recently announced that it was building another facility, to begin operating in 2026, that it says will bring its installed capacity to 60,000 tonnes a year.)
That 25,000 tonnes figure is comparable to the combined output of all of the rare-earth magnet makers that aren’t in China. The $500-million e-VAC plant being built in South Carolina, for example, is reportedly designed to produce around 1,500 tonnes a year.
But even those numbers do not fully convey China’s dominance of permanent magnet manufacturing. Where ever a factory is, making neodymium magnets requires supplies of rare-earth metal, and that nearly always leads straight back to China. “Even though they only produce, say, 85 percent of the magnets, they are producing 97 percent of the metal” in the world, says Constantinides. “So the magnet manufacturers in Japan and Europe are highly dependent on the rare-earth metal coming from China.”
MP’s Mine-to-Manufacturing stragegy
And there, at least, MP Materials may have an interesting edge. Hardly any firms, even in China, do what MP is attempting: produce finished magnets starting with ore that the company mines itself. Even large companies typically perform just one or at most two of the four major steps along the path to making a rare-earth magnet: mining the ore, refining the ore into rare-earth oxides, reducing the oxides to metals, and then, finally, using the metals to make magnets. Each step is an enormous undertaking requiring entirely different equipment, processes, knowledge, and skill sets.
The rare earth metal produced at MP Materials’ magnet manufacturing facility in Fort Worth, Texas, consists of mostly neodymium and praseodymium.Business Wire
“The one advantage they get from [doing it all] is that they get better insights into how different markets are actually growing,” says Stan Trout, a magnet industry consultant in Denver, Colorado. “Getting the timing right on any expansion is important,” Trout adds. “And so MP should be getting that information as well as anybody, with the different plants that they have, because they interact with the market in several different ways and can really see what demand is like in real time, rather than as some projection in a forecast.”
Still, it’s going to be an uphill climb. “There’s are a lot of both hard and soft subsidies in the supply chain in China,” says John Ormerod, an industry consultant based in Knoxville, Tenn. “It’s going to be difficult for a US manufacturer to compete with the current price levels of Chinese-made magnets,” he concludes.
And it’s not going to get better any time soon. China’s rare-earth magnet makers are only using about 60 percent of their production capacity, according to both Constantinides and Ormerod—and yet they are continuing to build new plants. “There’s going to be roughly 500,000 tonnes of capacity by the end of this year,” says Ormerod, citing figures gathered by Singapore-based analyst Thomas Kruemmer. “The demand is only about 50 percent of that.”
The upshot, all of the analysts agree, will be downward price pressure on rare earth magnets in the near future, at least. At the same time, the U.S. Department of Defense has made it a requirement that rare-earth magnets for its systems must be produced entirely, starting with ore, in “friendly” countries—which does not include China. “The DoD will need to pay a premium over cheaper imported magnets to establish a price floor enabling domestic U.S. producers to successfully and continuously supply the DoD,” says Constantinides.
But is what’s good for America good for General Motors, in this case? We’re all going to find out in a year or two. At the moment, few analysts are bullish on the prospect.
“The automotive industry has been extremely cost-conscious, demanding supplier price reductions of even fractions of a cent per piece,” notes Constantinides. And even the Trump administration’s tariffs are unlikely to alter the basic math of market economics, he adds. “The application of tariffs to magnets in an attempt to ‘level the playing field’ incentivizes companies to find work-arounds, such as exporting magnets from China to Malaysia or Mexico, then re-exporting from there to the USA. This is not theoretical, these work-arounds have been used for decades to avoid even the past or existing low tariff rates of about 3.5 percent.”
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