Western rare earths supply chain springs into gear

MELBOURNE (Reuters) - Global supply chains for rare earths are realigning to diversify away from top producer China to make permanent magnets used in products from electric vehicles to wind turbines and drones.

Below are companies that have or are building production facilities for rare earth compounds, metals and magnets to reduce the West's current near-total dependence on imports from China.

Rare earths processing occurs in two main stages. The first involves extracting the rare earths from ores containing other minerals and concentrating them into a mixed rare earth concentrate or carbonate. The second is a more complex stage that separates the rare earths into individual oxide compounds. From there the products are turned into metals used to produce magnets.

LYNAS RARE EARTHS

Lynas Rare Earths is the world's biggest supplier of rare earths compounds outside China, from its Mount Weld mine in Australia. It has processing operations in Australia and Malaysia and is building a heavy rare earths processing plant in Texas, with the help of $288 million in U.S. defense funding, expected to come online in fiscal 2026. It will be able to process third-party material.

SOLVAY

Belgian chemicals maker Solvay is expanding rare earths processing at its La Rochelle operations in France, aiming to launch separation and production of rare earth oxides needed for permanent magnet production in 2025. Currently Solvay processes rare earths for other uses, such as for auto catalysts. In March, Solvay signed a memorandum of understanding with French rare earths partner Carester to look at manufacturing opportunities for the permanent magnets supply chain in Europe. It also has an agreement to buy rare earth oxides from recycled material from Canadian clean tech start-up Cyclic Materials.

France-based Carester aims to recycle 2,000 metric tons of magnets and separate 5,000 tons of heavy rare earth concentrates from mining per year from 2026.

VACUUMSCHMELZE

Germany's Vacuumschmelze, one of the biggest permanent magnet producers outside of China, has manufacturing operations in Germany, Slovakia, Finland, China and Malaysia. It was bought by U.S. private equity firm Ara Partners in October.

It was awarded U.S. government funding of $111.6 million to build a neodymium-iron-boron magnet plant in South Carolina. The plant is expected to be finished by late 2025.

The company has a magnet supply agreement with General Motors and supplies the U.S. Department of Defense.

LESS COMMON METALS

UK-based Less Common Metals produces rare earth metals/alloys from its base in northern England and is part of the European Supreemo project to establish a European rare earths value chain.

REETEC

REEtec in Norway, backed by Swedish miner LKAB, is building a commercial rare earth separation plant due to come into production in 2025. It is in discussions with companies to provide concentrate for the plant.

ILUKA

Australian mineral sands producer Iluka Resources is building its Eneabba rare earths refinery in the country's northwest that will process heavy rare earths from its own mines and from third parties like Northern Minerals. Commissioning is expected at the end of 2026. Iluka has been awarded an A$1 billion ($660 million) loan from the Australian government for what will be Australia's first fully integrated rare earths refinery.

POSCO, STAR GROUP

South Korea's Posco International will provide permanent magnets produced by Star Group to German and U.S. automakers from 2025, sourced from the U.S., Australia and Vietnam. Privately held Star Group is the sole manufacturer of rare earth permanent magnets in South Korea.

JAPAN

Japan has a well developed magnet market that supplies its automotive and high tech industries. Among the biggest producers are Shin-Etsu Chemical, TDK Corp and Proterial.

VTRE

Vietnam rare earth processor VTRE, which had partner agreements with Australian rare earth developers Blackstone Minerals and Australian Strategic Materials, suspended production late last year after its chairman was arrested for violating mining regulations.

NEO PERFORMANCE MATERIALS

Toronto-listed Neo Performance Materials produces rare earth oxides, magnetic powders and permanent magnets. It has facilities around the world including in China, the U.S., Germany, Canada, Thailand and the UK. It plans to launch a new permanent magnet plant in Estonia next year.

SASKATCHEWAN RESEARCH COUNCIL

Canada's Saskatchewan Research Council received C$31 million ($22.57 million) in government funding to build a rare earths processing plant. It has a supply agreement with Vietnam's Hung Thinh Group (HTG) to import up to 3,000 tons of rare earth carbonate per year for five years beginning in June 2025.

UCORE

Canada's Ucore Rare Metals is building a heavy and light rare earths separation facility in Louisiana set to come online in late 2025.

RAINBOW RARE EARTHS

Rainbow Rare Earths, backed by Dublin-based private investment firm TechMet, has begun a rare earth oxide separation process at a K-Technologies facility in Florida for rare earths carbonate that it aims to produce from its Phalaborwa project in South Africa.

MP MATERIALS

MP Materials is building a rare earth magnet manufacturing facility in Texas, helped with $58.5 million in government funding. It currently ships rare earth concentrate to China, although it started to produce some rare earth oxides at its California mine site in 2023. The company expects to be producing finished magnets by late 2025 which it will supply to General Motors. It reported a wider than expected loss in the first quarter due to weak rare earth prices.

ENERGY FUELS

Energy Fuels, a U.S. producer of uranium and rare earth elements, said on June 10 it had started to produce commercial quantities of separated rare earths at its Utah operations, where it expects to produce up to 1,000 tons of neodymium-praseodymium a year.

FIEMG

Brazil's state of Minas Gerais Federatio of Industries (FIEMG) is building a proof-of-concept magnet factory set to open in the second half of this year that will have capacity to produce 100 tons of magnets a year when at full capacity.

($1 = 1.3737 Canadian dollars, 1.5147 Australian dollars)

(This story has been corrected to say MP Materials began producing rare earths oxides in 2023 and not earlier this year, in paragraph 20)

(Reporting by Melanie Burton in Melbourne and Fabio Teixeira in Rio De Janeiro. Additional reporting by Yuka Obayashi in Tokyo, Eric Onstad in London, Francesco Guarascio in Hanoi and Ernest Scheyder in Houston; Editing by Sonali Paul)