EU to support rare earth magnet production

The moves to support production of rare earth permanent magnets would mirror legislation introduced in the United States earlier this month to offer tax credits to makers of the devices there.

The United States, the EU and Britain aim to expand output of the super-strong magnets used in electric vehicles (EVs) and wind turbines to help meet targets to cut carbon emissions and lessen dependence on China, whose producers currently dominate the global sector.

European firms say they cannot compete with Chinese producers, which they say get subsidies worth about a fifth of their raw materials costs, helping them to supply 90 per cent of the global market for the magnets.

The proposals being considered by the EU include both cheap financing and compensation for higher raw material costs, said two sources who have seen the plans but were not authorised to speak publicly about them.

“If we’re going to invest our own capital, we will need to see a coordinated effort where our portion of the capital will attract a sufficient return,” said Constantine Karayannopoulos, chief executive of Neo Performance Materials.

Neo owns the only commercial rare earth separation facility in Europe and is prepared to build a US$100 million permanent magnet factory in Estonia, Karayannopoulos added. He said he had not seen the EU proposals but supported a public/private effort to boost the sector.

The EU launched the European Raw Materials Alliance (ERMA) late last year to ensure the bloc has a range of critical minerals needed for its green transition and gave top priority to rare earths.

The bloc aims to create a domestic industry of rare earth mining, processing and magnets to lessen vulnerability to any disruption in Chinese supplies.

China supplies 98 per cent of EU demand for magnets made from rare earths, a set of 17 minerals used in range of applications including electronics, defence and aerospace.

A Chinese rare earths industry official said the country’s policy of encouraging export tax rebates for magnets has a long history and the ultimate beneficiaries are end users.

European officials hope to repeat Europe’s success in building an EV battery sector, which has seen a surge of investment after the EU offered funding and coordination.