Neo Performance opens Europe’s first REE magnet plant

Neo Performance Materials (TSX: NEO; US-OTC: NOPMF) has officially opened its $75-million facility in Estonia, becoming the first to mass produce rare earth magnets for Europe’s automotive and wind energy sectors.

The facility, according to media reports, began production on Friday, targeting an initial rate of 2,000 tonnes of magnets per year, enough to supply over a million electric vehicles or more than 1,000 offshore wind turbines.

However, Neo’s chief executive Rahim Suleman sees further room for production growth given Europe’s reliance on China for its magnets. In an interview with the Financial Times, he says the EU is relying on China for 98% of its magnet use, which is “untenable” especially with demand set to almost triple in the next 10 years.

As such, the company is planning to ultimately expand its annual production rate to 5,000 tonnes to match that projected demand.

Shares in Neo Performance Materials gained 2% on Monday morning in Toronto to $18.80 apiece, valuing the company at $787 million. The stock has more than doubled this year. 

EU plans

Neo’s plans also align with those of the EU, which aims to boost domestic processing of critical minerals such as rare earths to 40% by 2030, thereby reducing its reliance on China. The new facility, situated in the northeastern city of Narva, was supported by an EU grant of up to €18.7 million.

“The rare earth magnets that will be produced here are indispensable to growth and innovation,” said European Commission president Ursula von der Leyen in a statement cited by FT.

With the official plant opening, Neo announced on Friday it has signed contracts with German auto suppliers Schaeffler and Bosch.

In a press release announcing its deal with Bosch, Suleman said: “This secures a significant portion of our future production and speaks to our strategy of prioritizing partnerships with the world’s largest and most innovative companies.”

The plant sits next to Neo’s existing rare earth separation facility at Narva on the Estonian on border with Russia. In 2022 after the Russian invasion of Ukraine, Russian President Vladimir Putin noted Narva’s strategic importance to Russia, comments which unnerved locals.