Sourcing Magnets? Here’s How to Think About Supply Chain Risk

If your organization sources magnets—whether for electric motors, sensors, or industrial equipment—you have likely noticed that procurement has become less predictable in recent years. More than 85 percent of rare earth metals used in permanent magnets are mined and processed in China, creating a concentration that can expose buyers to geopolitical friction, shifting export policies, and price swings. Neodymium prices, for instance, have been known to double within a few months, affecting project budgets in ways that are difficult to anticipate. Export license reviews for certain magnet materials can stretch to 60 days or longer, with no guaranteed outcome.

So what can procurement teams do? One approach is supplier diversification. Relying on a single source—or a single country—leaves little room for maneuver when disruptions occur. Building relationships with multiple suppliers across different regions, including emerging producers outside China, can provide alternative pathways when one channel tightens. Another strategy involves inventory planning. Strategic stockpiling of critical magnet materials may not eliminate risk, but it can buy time during short-term supply shocks.

Design flexibility also deserves attention. Some organizations are exploring alternative magnet materials or re-engineering components to reduce dependence on specific rare earth elements. While not every application can easily substitute materials, even small design adjustments can expand the range of available suppliers. Finally, visibility matters. Supply chain risk dashboards and digital mapping tools can help procurement teams monitor exposure and identify weak links before they break.

Magnet supply chains are unlikely to become simple or fully predictable in the near term. But by diversifying suppliers, building buffer stock, staying open to design alternatives, and improving supply chain visibility, procurement professionals can reduce vulnerability and maintain greater control over their sourcing outcomes.