Rare Earth Elements Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

Global Rare Earth Elements Market Trends and Insights

Renewable-Energy Turbine Magnet Requirement

Neodymium-iron-boron magnets, favored by direct-drive wind turbines and battery-electric vehicles, offer unparalleled weight-to-power ratios compared to ferrite alternatives. Demand for magnet-grade rare earths is expected to grow significantly, predominantly driven by wind energy and mobility sectors. Each 3 MW offshore turbine incorporates neodymium-praseodymium and dysprosium, with global offshore installations experiencing substantial growth. The momentum in electric vehicles is undeniable, with shipments projected to increase significantly in the coming years. However, dysprosium supply poses a challenge, with a staggering majority sourced from China's ionic-clay deposits. Moreover, while efforts to find substitutes are ongoing, they've struggled to dip below a content threshold without jeopardizing thermal stability. This robust demand for magnets solidifies the position of the Rare Earth Elements market through 2031.

Dependency of Green Technology on Rare Earth Elements

Decarbonization policies are weaving rare earth elements into the fabric of the energy transition. From cerium oxide catalysts powering hydrogen fuel cells to yttrium phosphors illuminating solid-state lighting, these elements play a pivotal role. While the European Union's 'Fit for 55' initiative and the U.S. 'Inflation Reduction Act' champion domestic sourcing, they fall short in addressing the processing gap. Demand for lanthanum in nickel-metal-hydride batteries has eased. However, as emission norms tighten in emerging markets, demand for cerium oxide in automotive catalysts remains steady. This presents a strategic risk: the pace of clean-tech adoption might outstrip the growth of non-Chinese capacities, potentially leaving OEMs vulnerable to a concentrated supply chain.

Growing Demand from Battery Applications

Lanthanum-rich alloys remain the negative electrode in nickel-metal-hydride batteries that powered millions of hybrid vehicles in 2024^{[1]Toyota Motor Corporation, “Annual Report 2024,” global.toyota}. Although lithium-ion dominates full-battery electrics, nickel-metal-hydride retains cost and safety advantages for mild hybrids and certain stationary systems. Research into lanthanum-doped solid-state electrolytes indicates a potential second-wave demand surge post-2028. Separately, neodymium and praseodymium are under investigation as cathode dopants to boost cycle life, reinforcing the Rare Earth Elements market’s increasing pivot from energy storage to high-performance motors.

Scandium-Aluminum Alloys in Aerospace Manufacturing

Adding scandium refines the grain structure of aluminum, allowing aerospace parts made with this additive to be significantly lighter than those made from traditional alloys. While Airbus and Boeing have approved the use of scandium in cabin brackets and engine-nacelle components, the high price of scandium limits its adoption to low-volume, high-value parts^{[2]Airbus, “Innovation in Aerospace Materials,” airbus.com}. In 2024, global production remains limited, and for the aerospace sector to broaden its use of scandium, supply must expand. This expansion hinges on specific projects aimed at increasing availability.

Chinese Policy-Induced Price Volatility

In October 2025, Beijing expanded its export controls, introducing a content threshold. This new rule mandates that downstream producers certify the source of every rare earth atom in their finished goods. As a result, European importers witnessed a dramatic surge in dysprosium oxide prices, compelling turbine OEMs to scramble and renegotiate their supply contracts. While these controls faced a suspension until November 2026, the move set a precedent. It led to multi-year offtake deals being struck at premiums, underscoring the Rare Earth Elements market's heightened sensitivity to shifts in Chinese policy.

Inconsistent Supply of Rare Earth Elements

China dominates the global rare earths landscape, operating the majority of the world's facilities. As of early 2026, no Western plant has achieved commercial processing of heavy rare earths. Material from Mountain Pass continues its journey to China for final refining, a process that not only extends lead times but also subjects producers to tariffs. While Lynas' plant in Malaysia is missing heavy-earth circuits, Arafura's Nolans project in Australia won't hit its full output until 2027. Additionally, sporadic production from pilot operations, like Northern Minerals' Browns Range, adds to the planning uncertainty, hindering the near-term growth of the Rare Earth Elements market.

Segment Analysis

By Product Type: Light Rare Earths Anchor Volume, Heavy Grades Command Premiums

Light rare earths captured 87.18% of volume in 2025 and are set to grow at a 5.92% CAGR through 2031. Cerium oxide, a key player in automotive catalysts, maintains a stable demand, bolstered by tightening Euro 7 and China VI standards. Lanthanum, essential for nickel-metal-hydride batteries, sees consistent consumption yearly. Meanwhile, neodymium-praseodymium production has exemplified the magnet-driven demand. Although heavy rare earths make up a smaller portion of the volume, they command premium prices. This is largely due to dysprosium, terbium, and yttrium's lack of scalable substitutes and their constrained supply. Dysprosium, the fastest-growing element, will track a 7.26% CAGR on the back of high-temperature magnet demand for EVs and offshore turbines.

China's dominance in supply heightens price sensitivity. Ionic-clay deposits in Jiangxi and Guangxi provinces produce a significant portion of the world's dysprosium, putting Western OEMs at risk of policy shocks. While Australian projects like Browns Range and Nolans offer a glimmer of diversification, they grapple with lengthy permitting and financing challenges. Consequently, producers capable of delivering separated heavy oxides retain significant pricing power, solidifying the premium structure in the Rare Earth Elements market.

By Element: Cerium Leads Volume, Dysprosium Captures Value

Cerium commanded 38.16% of the elemental share in 2025, driven by catalytic-converter and glass-polishing uses, and will remain volume leader through 2031. Forecasts indicate cerium will maintain its leadership position through 2031. Neodymium and praseodymium, together accounting for a significant portion of the market, play pivotal roles in the production of permanent magnets across China, Japan, and the U.S. Lanthanum finds its primary applications in fluid-cracking catalysts and nickel-metal-hydride batteries. Dysprosium, despite constituting a smaller share of the market, enjoys a high unit value and a 7.26% CAGR. This underscores dysprosium's critical importance in formulating high-temperature magnets, especially for electric vehicle traction motors and wind turbines. Terbium and yttrium, while occupying smaller market niches—terbium in green phosphors and yttrium in ceramics and LEDs—both grapple with similar supply constraints.

Scandium, with limited annual production, commands the highest price per kilogram in the market, a testament to its rarity and challenges in byproduct recovery. However, should recovery circuits in Canada and the U.S. become operational, scandium's applications could broaden from cabin brackets to encompass larger aerospace structural components, potentially expanding its presence in the Rare Earth Elements market.

By Application: Magnets Surge Past Catalysts as Primary Demand Vector

Magnets accounted for 48.54% of total volume in 2025 and are growing at a 7.43% CAGR, making them the engine of the Rare Earth Elements market through 2031. Industrial robotics adds momentum: each robot integrates servo motors, and global installations saw significant growth, with China leading in installations. Catalysts absorbed cerium in 2024 and stayed flat under rising hybrid penetration in emerging markets. Phosphors, glass-polishing, and metallurgy remain secondary, each with low single-digit growth, ceding share to the magnet segment as electrification accelerates.

By End-Use Industry: Clean Energy Dominates, Industrial Automation Accelerates

Clean energy held 30.36% of the 2025 volume and retains leadership as offshore wind and EV adoption surge. Industrial automation is the fastest-growing end use, advancing at a 6.49% CAGR, propelled by expanding collaborative-robot deployment across China, Germany, and the United States. Consumer-electronics demand is plateauing as smartphone shipments level off, though per-unit magnet content remains sticky. Aerospace and defense contribute a small demand but are immunized from cyclical swings by national-security designations in the United States and European Union, ensuring stable procurement of samarium-cobalt and dysprosium-rich magnets. Healthcare, metallurgy, and agriculture round out consumption with niche but steady volumes.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

Asia-Pacific accounted for 86.29% of global volume in 2025 and will maintain dominance with a 5.97% CAGR to 2031. China produced oxides and commanded the majority of the separation capacity. This dominance allowed China to exert export-control leverage, causing European dysprosium prices to surge significantly post-October 2025. Australia is positioning itself as the leading non-Chinese supplier. Arafura's Nolans project aims to produce neodymium-praseodymium oxide by 2027. Concurrently, Iluka Resources is progressing with a refinery targeting mixed-carbonate output. To mitigate their reliance, Japan and South Korea have inked multi-year contracts with Lynas and MP Materials.

North America is making strides to localize its supply. Mountain Pass, having produced concentrate in 2024, halted exports to China in Q3 2025, redirecting its feed to a separation plant in California. A significant equity stake from the Department of Defense is backing a heavy-earth circuit, targeting output by mid-2026. Energy Fuels' White Mesa mill, traditionally focused on uranium, pivoted to process monazite. Meanwhile, Ucore is in the process of establishing a RapidSX plant in Alaska.

Despite its market presence in 2025, Europe remains heavily reliant on imports. This is in light of the Critical Raw Materials Act, which sets ambitious targets for extraction, processing, and recycling by 2030. While LKAB's Per Geijer deposit boasts significant oxide reserves, its development is a decade away. Pilot recycling initiatives from Cyclic Materials and Urban Mining Company seek to address the shortfall, yet the region lacks any commercial-scale separator. Both South America and the Middle East-Africa regions combined accounted for a minimal share of the total volume. However, Brazil and South Africa are eyeing potential capacities that could materialize post-2030.