Neo Magnequench, a division of Canadian permanent magnet manufacturer Neo Performance Materials (TSX: NEO) has broken ground on its first rare earth magnet manufacturing plant build in Europe.
The facility in Narva, Estonia will produce specialized rare earth permanent magnets for use in electric vehicles, wind turbines and other green technologies.
The plant’s production output, expected to start in 2025 will support the manufacturing of about 1.5 million electric cars, Neo said in a news release on Friday. Its Phase 2 production of 5,000 tonnes per year can support 4.5 million cars.
“Neo is embarking on a new chapter of serving the automotive and wind energy industries,” said Neo president and incoming CEO Rahim Suleman. “We are building the first rare earth permanent magnet manufacturing facility in Europe, with the specifications of our German, French, and other European OEM and Tier 1 customers in mind, suitable for traction motors for electric vehicles.”
Suleman is expected to take over this month from CEO Constantine Karayannopoulos, whom Neo said is to retire on July 7 after 30 years with the Toronto-based company.
An exploration team overlooking Paradise Valley at Hudson Resources’ Sarfartoq Carbonatite Complex in southwest Greenland, where Neo Performance Materials purchased the exploration licence for the project. Credit: Hudson Resources
The Narva plant represents the downstream formation of Neo’s mine-to-magnet supply chain, as it will produce sintered neodymium-iron-boron magnets using rare earth feedstock supplied from Neo’s rare earths separation facility in Sillamae, just west of Narva. The feedstock is to come from sources in the U.S. and elsewhere, Neo said.
The company has a supply agreement with Energy Fuels (TSX: EFR; NYSE: UUUU), where the Colorado-based producer of uranium, vanadium and rare earths provides Neo with mixed rare earth carbonate produced at its White Mesa Mill in Utah that was initially mined as monazite sand ore in Georgia by Chemours (NYSE: CC).
The company is also developing the upstream side of its supply chain with a summer drilling program at its Sarfartoq rare earths project in southwest Greenland. Neo purchased the exploration licence for Sarfartoq from Hudson Resources (TSXV: HUD) for US$3.5 million last August.
Neo formed exploration subsidiary Neo North Star Resources (NNSR), which will do the drilling at Sarfartoq, located near the town of Kangerlussuaq. It’s planning a preliminary economic assessment (PEA) for Sarfartoq in 2024.
The exploration licence covers part of the larger Sarfartoq carbonatite complex that also hosts Hudson’s ST1 rare earth elements project and the Nukittooq niobium-tantalum project.
Both projects contain neodymium and praseodymium in an indicated resource of 5.9 million tonnes averaging 1.8% total rare earth oxides (TREO), according to a 2012 update to Hudson’s PEA published in 2011. Inferred resources accounted for 2.5 million tonnes averaging 1.6% TREO for the ST1 zone, based on a 1% cut-off grade.
Neo plans to eventually ship rare earth concentrate from the deep-water fjord at Sarfartoq to Sillamae.
European Commission president Ursula von der Leyen, who spoke at the groundbreaking ceremony in Estonia, hailed the start of Europe’s first mine-to-magnet supply chain.
“Neo Performance Materials informed me that, with their worldwide experience, they have never seen such a fast issuance of permits as for this facility,” she said. “And this is Europe at its best. With the European, the national and the local institutions all equally on board, with fast, decisive action, with a clear vision for the future, the Union of the future is being won right here in Narva. Today, all Europe looks at you with pride and hope.”
Karayannopoulos, who was also at the ceremony, said Neo is proud to be the anchoring investment that will help Estonia become a hub for critical raw material supply chains for Europe’s transition to energy security.
“With the support of the European Union’s Just Transition Fund, our company is de-risking rare earth supply chains in Europe and globally, which in turn de-risks a million jobs in the transition from the internal combustion engine to electric vehicles in Europe and the production of wind turbines for Europe’s energy security,” he said.
Neo shares were down by more than 3% on Friday at mid-day in Toronto and traded at $8.78, for a market cap of $396.8 million. Its shares traded in a 52-week window of $7.17 and $17.20.
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