Rare earth element (REE) recycling is evolving from niche curiosity to strategic necessity as the clean energy transition increasingly drives demand for permanent magnets.
Currently, less than 1 percent of rare earth metals are recycled, while the demand for magnets is expected to triple by 2035. This gap could leave the West facing a supply shortage of up to 30 percent unless scrap flows are tapped on a large scale.
“Today, magnetic REEs make up about 30 percent of total REE volume, but they capture more than 80 percent of the value,” McKinsey notes in an article. July report. “Going forward, global demand for magnetic REEs is expected to triple from 59 kilotons (kt) in 2022 to 176 kt in 2035, driven by strong growth in electric vehicle (EV) usage, outpacing the replacement of REEs with copper coil magnets, as well as the rapid pace of renewable capacity expansion in wind.”
Policymakers are also starting to take action: those of the EU Rules for critical raw materials aim for recycling to meet roughly a quarter of the region’s rare earth needs by 2030, fueling public-private pilots and new factories across Europe.
At the same time, startups are commercializing separation methods with lower emissions and higher yields for NdFeB magnets and other raw materials, from car scrap to discarded wind turbines.
One such company is Cyclic Materials. Founded in 2021, the privately held Canadian cleantech company is working to advance a circular supply chain for REEs in North America.
The Investing News Network spoke with CEO and co-founder Ahmad Ghahreman at the recent Rare Earth Mines, Magnets & Motors event in Toronto, Canada, to discuss rare earth recycling and his views on Cyclic’s growth.
“Our goal is to make these metals more circular by recycling end-of-life products, from electric motors in cars to power tools in the garage, hard drives in data centers. The list goes on: MRI machines, medical devices and whatnot, and basically recycling REEs and putting them back on the market,” he said.
Unlike other metals such as copper, aluminum and nickel, which have a 40 percent recycling rate, the rare earth recycling market has struggled. Part of the problem is the difficulty in divorce.
Citing the McKinsey report, Ghahreman noted that technical challenges are a major barrier to REE recycling. Magnets, often bonded with iron or steel, typically end up in steel recycling streams, causing the loss of valuable REEs.
Historically, low numbers of magnets on the market have limited recycling efforts, but with demand for magnets set to rise – powered by electric vehicles, wind turbines and electronics – recycling is becoming increasingly important.
Cyclic’s proprietary MagCycle and REEPure technologies recover and refine REEs from end-of-life magnets in Ghahreman’s products mentioned above, converting waste into reusable raw materials.
“For every 100 tons of material that comes to Cyclic Materials, more than 99 tons of it is recycled as product,” he said. The remaining 1 percent consists of mixed, non-recyclable plastics.
After launching its first commercial demo plant in 2023 and a hydrometallurgical facility in Kingston, Ontario, in 2024, Cyclic is now expanding internationally, with Mesa, Arizona, marking its first U.S. location.
Domestic rare earths are critical as tensions rise in China
The recycling of rare earth metals is expected to be key to developing a robust supply chain for critical metals outside China, which has dominated the sector’s refining and processing capacity for decades.
China is known for its control over the market in times of tension. Earlier this year, Beijing responded to US President Donald Trump’s tariffs with retaliatory measures on rare earth exports. In June, China granted accelerated licenses to several car manufacturers, helping to ease some of the tension in the market.
However, in October, China again tightened export controls on twelve of the seventeen rare earth metals, including holmium, erbium and europium – important raw materials for electric cars, space and defense. Exporters now need permits, and Beijing is expected to reject applications related to military or advanced applications of artificial intelligence.
The rules extend to foreign companies that use Chinese rare earths or technology, echoing U.S. export restrictions, with violators risking losing access to Chinese suppliers.
The new export restrictions have escalated tensions with the US, which Trump has threatened to do impose “huge” new tariffs about Chinese imports. He has also criticized China’s actions as “hostile” and accused the country of trying to monopolize the global supply of rare earths, which are crucial to industries such as electric cars and aviation.
Against this background, Ghahreman sees that Cyclic will steadily increase its capacity and production over the next ten years.
“Within the next five to 10 years, Cyclic Materials’ recycled rare earth products are expected to supply enough material equivalent to three or four rare earth mines,” he said, adding that the company is not in competition with traditional miners, but rather complements the mining sector as demand for rare earths is expected to exceed production.
More immediately, Cyclic announced a $25 million investment to establish the first North American Center of Excellence for Rare Earth Metals Recycling in Kingston, Ontario in June.
Ghahreman expects the Mesa, Arizona, location to open in the first half of 2026.
While he wouldn’t speculate on when an IPO might happen, Amazon’s (NASDAQ:AMZN) Climate Pledge Fund was launched in April announced as an investor in Cyclic’s Series B round.
While the company has growth ambitions like anyone else, Ghahreman was convinced Cyclic exists because of two very specific metrics. “The main reason Cyclic Materials was founded was that rare earths are the most critical metals due to their expected consumption in our future gadgets, but at the same time the least circular metals because they are not recycled today,” he explains.
“I didn’t like those two statistics, and I really needed that and wanted to change that.”
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Securities Disclosure: I, Georgia Williams, have no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the views of the Investing News Network and do not constitute investment advice. All readers are encouraged to conduct their own due diligence.
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