Oxides are not Magnets
You cannot make a magnet out of oxide powder. It must be converted to metal. This is difficult because rare earths love oxygen and don’t want to let it go.
Molten Salt Electrolysis
This is the standard method for light rare earths (Nd, Pr). The oxide is dissolved in a bath of molten fluoride salts heated to over 1,000°C. A massive electrical current is passed through the bath, stripping the oxygen away and leaving liquid metal at the bottom.
Metallothermic Reduction
For heavy rare earths (Dy, Tb) which have higher melting points, a different method is used. The oxide is mixed with calcium metal and heated in a vacuum. The calcium steals the oxygen, leaving behind the pure rare earth metal sponge.