SUPPLY CHAIN PIVOT: G7 Targets Rare Earth Magnet Midstream Control

Why allied nations are racing to build mine-to-magnet capacity and bypass China’s chokehold

Strategic Context

Permanent magnets—particularly neodymium-iron-boron (NdFeB) types—are the irreplaceable core of EV drivetrains, wind turbines, drones, and military systems. While mining capacity for rare earth elements (REEs) is increasing in the U.S., Canada, and Australia, the midstream steps—separation, alloying, and magnet manufacturing—remain over 85% concentrated in China. The G7 Critical Minerals Action Plan now explicitly calls for coordinated investment and financing to establish full domestic and allied-region magnet supply chains.

The Risk

• Midstream Dependence – Without allied separation and magnet production, mined REEs must be exported to China, forfeiting value and control.
  https://www.g7hiroshima.go.jp/en/topics/2025-08-12-critical-minerals-joint-statement/
  
• Defense Vulnerability – Military systems like fighter jets, missiles, and naval propulsion rely on NdFeB magnets for critical functions; supply disruption would directly impact readiness.
  
• Capital and Technology Barriers – Magnet manufacturing requires specialized metallurgical processes and tight tolerance machining, deterring fast greenfield buildouts.
  

Exposure Example

• Korea Zinc – Evaluating rare earth separation and alloying integration alongside its nickel and cobalt refining hubs, leveraging existing metallurgical infrastructure to accelerate midstream buildouts.
  https://www.koreanzinc.co.kr/eng/
  
• USA Rare Earth – Advancing the Round Top project in Texas with plans for a U.S.-based magnet manufacturing plant targeting EV, wind, and defense sectors.
  https://www.usarareearth.com/news/
  
• Vital Metals – Producing rare earth concentrate from its Nechalacho project in Canada and seeking allied separation partners to retain value in the region.
  https://www.vitalmetals.com.au/
  

Why It Matters

• Dual-Use Criticality – NdFeB magnets are one of the few materials critical to both clean energy and defense, making them a top-tier strategic priority.
  
• OEM Procurement Pressure – Automakers and defense primes face increasing regulatory pressure to source from FEOC-compliant supply chains.
  
• G7 Leverage – Coordinated finance from G7 members can align supply, demand, and ESG standards to underwrite magnet projects that private capital has hesitated to fund.
  

Realignment in Motion

• Mine-to-Magnet Strategy – Projects that integrate mining, separation, alloying, and magnet production under one roof are being prioritized for funding.
  
• Processing Partnerships – Metallurgical leaders like Korea Zinc could shorten lead times by repurposing/refitting existing facilities for REE processing.
  
• Geopolitical Backstop – G7 plans include cooperative financing with Australia, India, and the Republic of Korea to secure multiple magnet production nodes outside China.
  

The Signal

The battle for REE control is moving from the pit to the plant. Owning the midstream—especially separation and magnet manufacturing—is where allied nations can break China’s strategic grip and capture the value chain’s most critical link.

Sources
 G7 Critical Minerals Action Plan communique: https://www.g7hiroshima.go.jp/en/topics/2025-08-12-critical-minerals-joint-statement/
Korea Zinc corporate site and strategic updates: https://www.koreanzinc.co.kr/eng/
USA Rare Earth Round Top Project and magnet plans: https://www.usarareearth.com/news/
Vital Metals Nechalacho rare earth concentrate production: https://www.vitalmetals.com.au/

444Critical.com
 Informational purposes only; not financial or legal advice. Information believed accurate but not guaranteed.