A secure and sustainable supply of critical raw materials is crucial to the economic strategy of industrialized countries. In the context of the current transition to green technologies, this applies in particular to rare earth elements (REEs) used for neodymium-iron-boron (NdFeB) magnets, which are essential for various key applications. The European Union and the United States have classified these elements as critical because they combine significant economic relevance, poor substitutability and high supply vulnerability. Recycling can reduce dependency, but the necessary technical and organizational conditions are currently not given. Consequently, political, scientific and industrial stakeholders are intensifying their efforts to establish an effective circular economy. At least on a laboratory scale, a broad spectrum of methods for processing end-of-life (EOL) magnets exists, but magnet extraction is also a major challenge. For specific applications, dismantling or hydrogen processing are effective, but for sufficient processing capacities, the implementation of a universally applicable process based on shredding and subsequent sorting is essential. Therefore, the present paper discusses a multi-stage sorting approach for the ferrous shredder fraction using simulative and experimental investigations to fill the gap in the existing process chain. The focus is set on physical processes exploiting differences in the magnetic and mechanical properties of the relevant materials.