LONDON, Sept 12 (Reuters) - How can the West break its dependency on China for rare earth magnets?

The question has taken on new urgency after China restricted exports earlier this year, sending shockwaves through Western manufacturing chains.

The race to build domestic mine-to-magnet supply chains has accelerated, particularly in the United States, where the Department of Defense is taking a direct stake in MP Materials (MP.N) , operator of the country's only rare earths mine, and guaranteeing a floor price for its products.

But part of the solution is lying in plain sight all around us in the form of old laptops, power tools and smartphones.

Given the criticality of rare earths in today's high-tech world, it's astonishing that less than 1% are recycled.

That may be about to change.

TECHNICAL BREAKTHROUGHS

The low recycling rate reflects a combination of technological and economic challenges.

Dismantling magnet motors, removing the rare earths and reprocessing them can be both manually and energy intensive. The concentration of rare earth elements in the final product is often so low that it is simply not worth it.

Automotive shredders, for example, will strip copper and aluminium out of end-of-life vehicles but the rare earth magnets end up in a steel mill, where they are lost to slag destined for landfill.

Several companies, however, seem to have cracked the problem using an array of technologies.

Canada's Cyclic Materials announced in June a $25-million investment in a recycling facility,  in Ontario to convert 500 metric tons per year of magnet-rich feed-stock into mixed rare earth oxide.

Cyclic has signed deals for the supply of end-of-life motors with Lime, , the company behind the ubiquitous shared e-bike, and SYNETIQ, , the UK's leading automotive salvage operator.

Proprietary dismantling and processing technologies recover not just the rare earths but all the other metals such as copper, which will be sent to Glencore's  Horne smelter in Quebec for refining back into cathode.

American Resources Corp's (AREC.O)  ReElement Technologies division is pioneering the use of chromatography to separate metals from both rare earth magnets and end-of-life lithium-ion batteries at its plant in Indiana.

The company, which has this month been awarded a $2-million grant from the Department of Defense, claims its technology uses 75% less energy and generates 70% less carbon emissions than existing recycling processes.

A multi-party collaboration, including Western Digital , Microsoft (MSFT.O), opens new tab and Critical Materials Recycling, has piloted, opens new tab acid-free dissolution technology developed by the Department of Energy's Critical Materials Innovation Hub,  to recover rare earths from hard drives collected from Microsoft data centers.

MP Materials itself is branching into the rare earths recycling business via a $500-million tie-up,  with Apple.

MAGNET POWER

This recycling revolution is only now starting to transition from pilot to commercial-scale operations.

But the new technology comes with a much lower price tag than new mines and primary processing plants. It can also deliver units faster.