Secondhand Magnets Wanted

“With recycling, Europe wants to become less dependent on rare earths from China. But how can local suppliers compete with the Far East?”

 

When the topic of rare earths comes up, Matthias Walch gets emotional. He can get angry at politicians, scientists, engineers, and purchasing managers of internationally interconnected companies. He is the head of research and development at Lars Walch GmbH & Co. KG, a medium-sized waste management company with 20 employees in Baudenbach, Franconia – halfway between Würzburg and Nuremberg. “We already had this issue back in 2011, so we’ve been addressing it ever since,” he says.

 

It quickly becomes clear in conversation with him that he’s surprised at how little others are paying attention to it anymore. They seem to have preferred to assume that the price explosion of 2011 for these metals, crucial in magnet production, was just an anomaly. Slight fluctuations in the price curve in 2022 many viewed it as more or less accidental. But when China, the leading exporter of rare earth elements, used supply chain control as a tool in its trade dispute with the United States at the beginning of October, everyone suddenly realized that this dependence could lead to serious shortages. Since then, a number of companies have privately hinted that the scarcity has brought their production to a standstill. Hardly any had kept reserves in stock.

 

Now, recycling is suddenly considered a sensible strategy again in the fight for raw materials. And waste management expert Walch is surprised that more people are talking the way he has been for over a decade. Four wind turbines are being delivered soon, from which his team will recycle magnets and return them to the economic cycle. He has been working to reprocess hard drive magnets. When he spoke to a specialist audience seven years ago about how he would even extract the magnets the size of a euro coin from loudspeakers, he was met with laughter from the PhD-holding experts.

 

Shortly after the turbulence of the past decade, Claas Oehlmann has published a book on the topic. The managing director of the Circular Economy initiative of the Federation of German Industries sees recurring patterns in the debate. "It runs in cycles and returns when there are problems." “Then they say, ‘We need recycling,’” he says. In times of crisis, resilience is considered a highly valued asset. The aim is to diversify supply chains and close material loops.

 

“The discussion always calms down once deliveries resume and prices normalize,” says Oehlmann. The data is unclear, but with a significant import value of unprocessed rare earth metals, China is by far the most important supplier, according to a study by IW Consult for the KfW development bank from March of last year. Conversely, the German market for China is negligible. In 2022, goods from the rare earth value chain worth €248 billion were imported into Germany. According to the authors, decoupling from mining is inconceivable.

 

Warehousing ties up a lot of capital but is used in individual cases. “A robust and adequately sized recycling chain for rare earths does not yet exist in Germany or Europe,” the study states. “For the foreseeable future, returns will not be sufficient to meet the entire demand to secure supplies in Europe," says Marius Kern, a geoscientist at the German Mineral Resources Agency within the Federal Institute for Geosciences and Natural Resources. Demand will increase sharply in the coming years. But the often long-lasting products containing magnets will remain in use for a long time.

 

"A ten-year-old wind turbine still has 15 to 20 years of service ahead of it," he says.

 

According to the IW Consult study, rare earth elements are used in 335 products in Germany. The most important sectors are the wind energy industry and the automotive industry, where they are used in electric motors. In headphones, they make the diaphragm vibrate. Other applications include car window regulators and magnetic resonance imaging (MRI) scanners, which create images of the brain. The industries affected are diverse.

 

In addition to waste management company Walch, the Heraeus subsidiary Remloy has also been pursuing a consistent course since the turbulence of the past decade. The recycling company was put on this path in 2016. For the past two years, the company has been supplying waste from its plant, where with other companies in Bitterfeld, Saxony-Anhalt, works with recycled rare earths. "We don't have that much mining in Europe; urban mining is essential," says David Bender, co-head of Heraeus Remmoy. After China became the leading rare earth producer over three decades through continuous economies of scale.  While the global production landscape has been streamlined, he sees no equal competitive conditions in Germany.

 

"The core challenge is the economic problem; European magnetic material will always be somewhat more expensive than China’s if we don't see any political measures," he says.

 

In the recent past, the issue of recycling has shifted from the abstract goal of sustainability to the more tangible issue of competitiveness. Most recently, the focus has been on safety – and the urgency has increased dramatically. Many companies have told him they've had to halt production lines. However, many of them are still not sufficiently aware that a safer, more diversified supply chain costs more.

 

"Few customers are willing to pay for a more resilient supply chain," says Bender.

 

Therefore, he doesn't answer the question of whether his offer is price-competitive with a clear yes or no. "In a closed European single market, we can be competitive against the Western world because our recycling approach is very efficient compared to primary production," he says. Collecting the required material is difficult. The magnets must be uncontaminated. Devices that can be easily disassembled are preferable. A wind turbine is simple, but magnets from an iPhone are not yet profitable. Heraeus Remmoy cannot compromise on quality.

 

The company cooperates closely with the pump manufacturer Wilo from Dortmund. Wilo boasts that it has saved 1,000 tons of CO2 through the take-back of old pumps at 620 collection points in Germany. Rare earth elements remain in circulation and do not have to be expensively extracted anew through mining. The company pays attention to product design that facilitates disassembly. Old magnets are pulverized and reintroduced into production.

 

The European Union has stipulated in its Critical Materials Act that it aims to produce a quarter of its critical raw materials through recycling by 2030. What happens if it misses this target is not part of the regulation, nor are the measures it intends to take to achieve it. “These are more ambitious declarations of intent than binding regulations,” says Marius Kern of the German Mineral Resources Agency.

 

Due to its dominant position in production, China has increasingly expanded the recycling value chain and is becoming active in the European market. If we want to break free from this dependency, it is not enough for individual companies like Heraeus Remloy, the waste management company Walch, and the pump manufacturer Wilo to take the lead. “We have to address several factors simultaneously,” he says, adding that companies and policymakers are called upon to act, and society needs to rethink its approach.

 

Experts believe that a political framework will be essential. Heraeus Remloy CEO Bender advocates for a quota for European rare earth materials in production, arguing that this is the only way to decouple the domestic market from China. Product design is key, says BDI expert Oehlmann. “This is extremely important as long as we don’t have robotics that can do everything,” he says. Design specifications facilitate recycling. “We also need labels indicating where the magnets are located. Where are the recycled materials? How are they being used?”

 

And waste management expert Matthias Walch wants something even more fundamental: that it no longer takes a year to build a new facility and five years to get approval for the furnace needed to recover magnets from a wind turbine. “Economic viability calculations are constantly disrupted by bureaucratic regulations,” he criticizes. “The rampant bureaucracy is currently also apparently hindering efforts to become a little less dependent on the all-dominating raw material supplier, China.” [1]

 

1. Secondhand-Magneten gesucht. Frankfurter Allgemeine Zeitung; Frankfurt. 08 Dec 2025: 20. Von Philipp Krohn, Frankfurt