Neo’s new European sintered rare earth magnet subsidiary wins major EV supply contract
August 21, 2024
Neo Performance Materials, Toronto, Canada, has announced that its wholly-owned Estonian subsidiary, NPM Narva OÜ (Magnequench Sintered Magnets), has been awarded a contract to supply sintered rare earth magnets to a European Tier 1 supplier of EV traction motors. The sintered magnets will be supplied by the company’s new European rare earth magnet manufacturing facility, currently under construction in Narva, Estonia.
The new facility, scheduled for completion in 2025, is expected to be the first sintered magnet plant to come online outside of Asia. It will produce 2,000 tonnes per year of magnets in Phase 1, enough to supply approximately 1 to 1.5 million electric and hybrid vehicle traction motors. Phase 2 of the project is expected to see around 5,000 tonnes/year, enough for 4.5 million electric cars.
The volumes represented by the new supply order will be approximately 35% of Phase 1 magnet capacity, with production revenues projected for the second half of 2026 through 2033, and peak supply to the customer expected in 2029.
“We welcome this significant commercial validation from a Tier 1 EV motor manufacturer. Neo is focused on becoming the first manufacturer and supplier of made-in-EU rare earth magnets for EV traction motors. This is one more endorsement that the need for parallel, local-for-local supply chains is defining the future of the EV manufacturing transition in Europe and North America – an inflection point that is at the core of Neo’s strategy,” stated Rahim Suleman, Neo’s President and Chief Executive Officer.
The new magnet facility is located close to Neo’s existing operating rare earth separation facility and began construction in 2023. It was awarded the first Just Transition Fund grant in the European Union and gained the recognition and support of the President of the EU Commission, Ursula von der Leyen, among other European government and industry leaders.
Data from Adamas Intelligence, the US Geological Survey, and customer discussions estimate that approximately 90% of sintered magnet production is concentrated in China today. The EU Critical Raw Materials Act has set targets such as 40% of rare earths material consumed annually to have been processed in the EU, 25% of rare earths magnetic material to be sourced from recycling in the EU, and no more than 65% of rare earth magnets to be sourced from a single jurisdiction outside the EU. Similarly, the US recently announced a new 25% tariff on rare earth magnets from China in effect from 2026 onward.
Historically, Neo’s Magnequench division has supplied the automotive industry for more than two decades with rare earth magnetic materials – more than half of its sales attributed to the automotive industry. Since its founding more than three decades ago, Neo’s Magnequench has developed, manufactured, and supplied rare earth magnetic products to customers with high qualification standards in vehicle traction motor, water circulation, residential appliances, and industrial automation applications globally.
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