Neo Magnequench, a division of the Canadian firm Neo Performance Materials Inc., has begun construction of the first rare earth magnet manufacturing facility in Europe.

The facility, located in Narva, Estonia, was announced on Friday and is designed to produce specialized rare earth permanent magnets for use in electric vehicles, wind turbines and other clean energy technologies.

The inauguration ceremony was attended by Neo’s CEO Constantine Karayannopoulos, Neo President Rahim Suleman, and several European and Estonian government leaders. European Commission President Ursula von der Leyen praised the initiative as “a leap for Estonia and a stride for Europe.”

The new facility is strategically located near Neo Performance Material’s existing rare earth separations plant in Sillamäe, Estonia. At the Estonian facility, Neo processes rare earth feedstock from various global sources, including the United States and produces high-purity magnetic rare earth oxides.

The rare earth materials will be converted into sintered neodymium-iron-boron magnets at the new Magnequench plant, creating an integrated supply chain for sintered rare earth permanent magnets that do not currently exist in Europe.

The inauguration event featured speeches from notable officials from Estonia and the European Union, as well as ambassadors and embassy staff from countries with commercial interests in Neo’s operations in Estonia, such as Canada, the United States, Germany and France.

Neo CEO Constantine Karayannopoulos, who has championed the project over the past two years, expressed pride in the initiative. He highlighted the role of the facility in helping Estonia become a hub for critical raw material supply chains for technologies necessary for Europe’s transition to electromobility and energy security from renewable sources.

“Neo is embarking on a new chapter of serving the automotive and wind energy industries. 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,” Neo President Rahim Suleman said. This move marks a significant step forward in the development of sustainable technologies in Europe.

In response to this development, European Commission President Ursula von der Leyen highlighted the importance of the rare earth magnets that will be produced at the facility for sectors like electric mobility, wind energy, and microelectronics. Her remarks underscore the strategic value of this initiative in the broader context of Europe’s clean energy goals.

Echoing these sentiments, Alar Karis, President of the Republic of Estonia, emphasized the project’s impact on EU competitiveness and its enhancement of the EU’s energy cluster. This project is not just about industrial development, but also about positioning Estonia and the EU at the forefront of the clean energy revolution.

In a local context, Narva Mayor Katri Raik expressed excitement about the 350 new jobs the facility will bring, emphasizing the importance of this new sustainable innovation industry for the city. The project promises to bring not just economic benefits, but also to contribute to the social fabric of the city.

“Market interest in our plans to produce permanent rare earth magnets in Europe continues to be very robust, and we look forward to being able to serve customers across rapidly expanding European automotive and wind energy markets,” said Greg Kroll, who leads Neo’s Magnequench business unit. His comments reflect the strong commercial potential of this initiative and the positive response it has received from the market.

Sintered rare earth permanent magnets are used in a wide variety of technologies that increase energy efficiency, reduce carbon dioxide emissions and help enable the European Union’s efforts to achieve carbon neutrality.

Neo Magnequench plans to launch Phase 1 production in 2025, with a goal of producing approximately 2,000 tonnes per year of rare earth magnet block. Commercial discussions with customers indicate demand in excess of Neo’s Phase 1 plants, and the Company is likely to expand to a Phase 2 production rate of 5,000 tonnes per year in the near future.

Neo Magnequench’s plant is the first such project proceeding with financial assistance from the European Union’s Just Transition Fund, a financial instrument that seeks to provide support to territories such as Estonia facing serious socio-economic challenges arising from the transition towards climate neutrality.