Europe Increases Investment in the Rare Earth Industry, US Targets Rare Earth Minerals in South America [SMM Rare Earth Overseas Weekly Review]

This week's overseas rare earth market developments showed that Europe made substantive progress in building a local rare earth supply chain, while the US strengthened cooperation with South American rare earth resources through capital and technology exports. The two regions adopted different paths to promote diversification of the rare earth supply chain.

Europe's rare earth industry layout entered a substantive stage this week.

Neo Performance Materials' rare earth magnet plant in Narva, Estonia, officially commenced operations. Construction of the plant began in 2023, and it was an early beneficiary of the EU's Just Transition Fund. Its Phase 1 production capacity is 2,000 mt/year, with plans to later expand to 5,000 mt/year.

The plant began shipping sintered magnet samples to customers in April this year and, as part of the initial production run, produced 18,000 assembled magnets meeting EV traction motor grade standards. Regarding market cooperation, an unnamed top European EV traction motor supplier agreed in August 2024 to purchase 35% of the plant's Phase 1 capacity.

Furthermore, Neo recently signed a multi-year preliminary contract with Bosch, under which Neo will reserve "a significant annual magnet production capacity" for Bosch. The company has also been promoting the establishment of a complete "mine-to-magnet" supply chain, aligning with broader efforts to diversify the rare earth supply chain away from China.

In France, the Lacq rare earth facility plans to invest $245 million, aiming to challenge China's 90% dominance in global refined supply. The project targets annual production of 600 mt of heavy rare earths and, through strategic international partnerships, aims to capture a 15% market share.

US Targets South American Rare Earth Minerals

In the US, the focus this week was on cooperation with South American rare earth resources. Aclara Resources announced an ambitious investment plan.

The company's Executive Vice President, Jose Augusto Palma, stated on Tuesday that they hope to invest $1.3 billion to build rare earth mines in South America and a processing plant in the US. This investment plan includes: investing $150-170 million to build a mine in Chile, $600 million to build another mine in Brazil, $300-400 million to build a separation plant, and $400 million to build a metals plant. Palma further revealed that the projects in Brazil and Chile aim to complete feasibility studies by mid-2026, commence construction within the same year, and begin production before 2028.

In the US, the sole producer of samarium cobalt magnets, Permang, is actively expanding its production capacity. The company's facility in Lancaster, Pennsylvania, is undergoing a multi-million dollar capital project that more than doubled its capacity.

The expansion includes adding state-of-the-art alloying, pressing, and manufacturing equipment to directly support its customers' growing demand. Permang CEO Joe Stupfel stated, "Our goal is to significantly increase domestic production of SmCo magnets, support US priorities, strengthen the domestic supply chain, and meet rising commercial demand."

Additionally, the US Defense Logistics Agency (DLA) has incorporated scandium oxide into the National Defense Stockpile and began soliciting bids from enterprises to supply this mineral/metal. The DLA indicated it will enter into contracts for supplying scandium oxide through fixed-price delivery orders over the next five years, with no cap on the procurement quantity.

Currently, there is only one source of scandium oxide in North America—Rio Tinto Group, which extracts high-purity scandium oxide from waste streams generated during titanium dioxide production at its facility in Sorel-Tracy, Canada. In May 2022, Rio Tinto produced the first batch of high-purity scandium oxide at its commercial-scale demonstration plant at the site, becoming the first and only enterprise in North America to produce this critical mineral.