Neo secures US$50 million for sintered magnets facility in Europe
November 6, 2024
Neo Performance Materials Inc, headquartered in Toronto, Canada, has entered into a loan agreement with Export Development Canada (EDC) for a US$50 million credit facility to finance the ongoing construction of its sintered magnets plant in Narva, Estonia.
Construction of the new facility began in 2023, and is reported to be progressing on time and on budget at an estimated cost of US$75 million. The facility has obtained significant support, including a grant of up to US$20 million (€18.7 million) from the European Union’s Just Transition Fund (JTF) in 2022. As of the first half of 2024, Neo has capitalised US$24.9 million since the project’s inception. The remaining estimated cost of US$50.1 million (prior to the JTF grant) is anticipated to be spent through the end of 2024 and into 2025.
The Estonian facility is strategically located near Neo’s existing rare earth separation plant. Phase One of the new facility’s operations is expected to produce 2,000 metric tons per year, with plans for future growth to support the growing use of sintered magnets.
“Neo is pleased to have EDC’s support to advance our new sintered magnets manufacturing facility. Strategically located in Estonia to support the mid-to-downstream integration with our Silmet rare earth separation facility, this manufacturing facility will be Neo’s first to produce made-in-EU rare earth magnets for electric vehicle traction motors. It will service the growing demand for localised, parallel supply chains, shaping the future of EV manufacturing in Europe and North America,” said Rahim Suleman, Neo President and Chief Executive Officer.
The loan will be advanced in two tranches of US$25 million and will mature five years from the date of each instalment, with repayment of principal beginning in two years. The outstanding principal amount carries an interest rate equal to the secured overnight financing rate, as administered by the Federal Reserve Bank of New York, plus an applicable margin.
Several of Neo’s subsidiaries, including the entity that owns the Narva project, are expected to provide guarantees and/or security in favour of EDC.
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