Four decades ago, one of the biggest rare earth manufacturing facilities in the world was located on France’s Atlantic coast. It produced elements that were used to build arc lights, colour televisions, and camera lenses.

After years of declining production, the plant’s present owner, Solvay, is working quickly to restore La Rochelle to its former splendour as Europe looks to increase production of the minerals driving the shift to green energy.

The 76-year history of the facility serves as a microcosm of the difficulties that the United States and Europe are facing in trying to reverse the significant shift in rare earth processing to China that occurred some 25 years ago.

China grew to dominate the market for rare earths, a collection of 17 minerals, by manufacturing them more cheaply than the West, with official assistance, and frequently putting environmental considerations out of mind in an industry that may produce hazardous waste.

China has strengthened sustainability and shut down polluting industries in recent years.

The La Rochelle plant’s production established the standard for rare earth pricing worldwide in the 1980s and 1990s. Now, it provides 4,000 metric tonnes of separated rare earth oxides annually, a little amount compared to the 298,000 tonnes China produced in the previous year.

Furthermore, Solvay’s meagre output of processed rare earths is concentrated on the sort that are needed for permanent magnets in wind energy and electric vehicles (EVs), not the ones that are needed for car catalysts and electronics. According to Solvay, they will be produced by the next year.

The president of Solvay’s division that manufactures rare earth goods, An Nuyttens, stated, “We at Solvay want to put rare earths for permanent magnets back on the map in Europe.”

“It’s not an easy one, it’s going to be step by step, as the chain from mining up to magnets production needs to be built.”

The 160-year-old chemicals company eventually hopes to fulfil 20% to 30% of Europe’s need for separated rare earths for the creation of magnets, but Nuyttens warned it might not be able to do so until around 2030 without providing a specific date.

A new EU rule that went into effect in May set lofty 2030 goals for the bloc’s domestic production of vital minerals needed for its green transition: by the end of the decade, 10% of yearly needs must be mined, 25% must be recycled, and 40% must be processed domestically.

Because rare earths are used in permanent magnets, which power EV motors and wind energy, the bloc has focused on rare earths as one of the most significant vital minerals.

By 2030, demand in the EU is expected to have increased sixfold, and by 2050, it is expected to have increased sevenfold.

However, production predictions seen by Reuters and interviews with over a dozen industry executives, consultants, EU-funded officials, business organisations, and investors suggest that the EU will struggle to fulfil most of the targets in rare earths.

Analysts warn that the bloc’s zero carbon aspirations may be impacted by the Critical Raw Material Act’s (CRMA) unmet requirements, which might lead to increased geopolitical strain with the West and more reliance on China. 98% of the imports of rare earth permanent magnets into the EU come from China.

EU Commission spokeswoman Johanna Bernsel stated that while the bloc will try to support initiatives that contribute to achieving the objectives in the CRMA, they were unable to verify the Reuters findings.

“Projects in Europe will benefit from a streamlined permitting process, as well as coordinated support for accessing de-risking financing tools and matchmaking with downstream users,” Bernsel stated.

Bar graph illustrating the percentage of the EU’s predicted 2030 rare earth demand that will be met by magnet oxide, permanent magnet, and magnet alloy suppliers.

Bar graph illustrating the percentage of the EU’s predicted 2030 rare earth demand that will be met by magnet oxide, permanent magnet, and magnet alloy suppliers.

Before permanent magnets can be made, the rare earth supply chain consists of three primary steps: mining, element separation, and metal/alloy production (the latter two fall under the processing aim). In a research, opens new tab by two EU-funded entities, Reuters collated output projections from businesses and contrasted them with a demand forecast to evaluate the bloc’s progress towards its objectives.

By 2030, the EU is expected to produce very little from rare earth mining, and the metals and alloys industry will only have one low-margin project. This is based on a study by Reuters.

In its most advanced sector, separation, the bloc is projected to reach one aim, generating 45% of demand by 2030.

Since magnets are a completed good, the last stage of the supply chain—producing them from the metals—is exempt from the new law’s requirements. However, a Reuters study projects that by 2030, EU output will only account for 22% of demand.

Public resistance to new mines, cautious backing from European industry that gains from low-cost Chinese imports, more restricted finance, erratic demand as EV sales growth stalls, and low metal prices are some of the barriers to increasing EU production of rare earth elements.

“Given how long it takes to get some of these projects and processing facilities off the ground, the window between now and 2030 is going to close very quickly,” key mineral specialist Ryan Castilloux of consultancy Adamas Intelligence said.

According to him, there is a “blindspot” when magnets are left out of the CRMA targets, which allows the legislation to provide “false-positive” findings.

While without directly responding to the issue, the EU spokesman did point out that the CRMA has a number of initiatives to promote recycling.

Although there are abundant reserves of rare earth metals on the European continent, they are not actively mined. This is unlikely to change very soon since public resistance has caused several projects to stagnate.

Reprocessing waste from Sweden’s LKAB iron ore mines is the sole expected production in the EU by 2030; according to a Reuters study, this would account for roughly 1% of the EU’s need for oxides needed for magnets.

The government’s approval procedure for the Norra Karr project in southern Sweden, which could provide a significant amount of the region’s needs, has been delayed for ten years, and environmentalists have opposed it on the grounds that it may contaminate drinking water.

An official from Leading Edge Materials (LEM.V), the project’s owner, opened a new tab and stated that a fresh mining lease application for a revised project is in the works, but he did not provide a timetable for when production will begin.

A request for comment from Reuters was not immediately answered by the Swedish government.

The project will, according to the business, be classified strategic under the CRMA, which might enable expedited permitting in 27 months.

Sokli, a different rare earths mining project in Finland, also hopes to be classified as a strategic project; however, permits and environmental impact assessments are still required.

The CEO of the project’s owner, the state-owned Finnish Minerals Group, Matti Hietanen, stated that it is not practical to have it commissioned before 2030.

Norway, a non-EU country, may supply 10% of the EU by 2031, according to Rare Earths Norway, a private firm that said this month that it had the largest rare earth mine in Europe.

Prospects for new mining operations are also being hampered by a decline in the price of rare earths.

“Most mines are simply not profitable at current price levels, so governments and automakers must be supportive,” London-based consultant Daan De Jonge of Benchmark Mineral Intelligence stated.

EU businesses are also preparing to capitalise on the enormous potential of recycling to provide essential rare earth elements; however, it will require some time before there is a enough supply of used EVs and wind turbines for processing.

Similar to Solvay, other business leaders expressed doubts about increasing production by 2030, saying Reuters they were unable to commit to starting or increasing production by that date.

Part of the caution stems from the fact that, as buyers wait for more reasonably priced models to join the market, demand for electric cars has been steadily declining in recent months after surging sharply for several years. across May, EV sales across Europe decreased by 9%.

Europe also faces competition from lower-priced imports from China, whose rare earth supply chain is heavily integrated and includes state-owned companies from mining to completed magnets.

Several prominent European rare earth companies have established long-term operations or joint ventures with Chinese companies, and they are leveraging this experience to support their recent EU projects.

Neo Performance Materials is among them. It operates in several nations, including China, and has a rare earth separation factory in Estonia.

In addition, it is constructing a permanent magnet plant in Estonia, with plans to start production the next year and increase it to 2,000 tonnes of annual capacity over the next two to three years—enough magnets to power around 1.5 million electric vehicles.

Whether or whether consumers accept the Critical Raw Material Act goals will determine how far expansion may go.

“If they’re going to buy 40% of their processed material here, we will absolutely support that demand with production capabilities in Europe,” said CEO Rahim Suleman.

Neo believes it can create magnets that would cost around $50 more per car than imported magnets from China, despite the fact that competing with China is difficult. Analysts estimate that the permanent magnets in hybrid and electric car motors can cost as much as half of the motor itself, or more than $300 per vehicle.

At a plant in Germany, GKN Powder Metallurgy has started producing permanent magnets on a modest scale. Based on demand, the company plans to expand into a bigger commercial operation.

Founded in 1951, Slovenia’s Magneti Ljubljana seeks to increase productivity, but in order to diversify their supply and, in some situations, improve sustainability, consumers must agree to pay more for items that are more expensive than Chinese imports.

“I’ve been working in this factory since 1986 and during that time, 27 factories in Europe closed down the production of magnets because of the price,” Managing Director Albert Erman said.

(Adapted from Reuters.com)

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