Canadian rare-earths company Neo Performance Materials plans a €400M expansion in eastern Estonia, covering its magnet plant in Narva, the Silmet separation facility in Sillamäe and new rare-earth metallisation capacity.
The European Commission selected the project for up to €126M from the EU Innovation Fund, while Neo estimates the total investment at about €400M, according to the Estonian Ministry of Foreign Affairs.
Neo connects separation, metallisation and magnet production
The planned investment would create an integrated rare-earth platform in Estonia, writes Postimees Majandus. The project includes the expansion of Neo’s permanent magnet facility in Narva, the modernisation of the Silmet separation plant and the conversion of separated rare-earth oxides into metals.
Neo expects the Narva plant’s annual nameplate capacity to rise from about 2,000 metric tonnes of permanent magnets to approximately 5,000 metric tonnes. The wider project could add up to 3,000 metric tonnes of permanent magnets per year, with one third of that additional capacity intended for offshore wind farms in the European Union.
The Silmet 2.0 element would triple total light and heavy rare-earth separation capacity. The European Commission designated Silmet 2.0 a Strategic Project under the EU Critical Raw Materials Act earlier this month, according to the company’s project information.
The expansion would also introduce digital infrastructure across separation, metallisation and magnet manufacturing. Neo plans to use digital twins and artificial intelligence to learn from plant data and operator expertise, predict quality, optimise resource use and translate validated findings into physical process control. Neo has described its Silmet operation as part of a rare-earth supply chain serving industries including electronics, medical technology, automotive, aerospace and defence.
Funding supports a more resilient European supply chain
“Estonia has worked for a long time to ensure that the European Commission supports the expansion of rare-earth permanent magnet production in Estonia. Today’s decision is an important step towards strengthening the resilience and security of European industry. It will help create new jobs in Estonia, ensure more secure supplies for European industry and reduce dependence on imports of critical raw materials. In addition, it provides an opportunity to develop Estonia into a centre of expertise in this field,” said Foreign Minister Margus Tsahkna.
“Our goal is clear – industries of strategic importance to Europe must free themselves from supplies from the aggressor state Russia. This is a matter of both our economic independence and security. Today’s funding decision will help accelerate the necessary changes, and we therefore expect NPM Silmet to act swiftly and decisively in finding alternative sources of raw materials so that rare-earth processing and permanent magnet production in Estonia can be launched as quickly as possible,” Tsahkna said.
“Neo’s strategy includes building the most vertically integrated rare earth magnetics value chain in Europe, and this project brings that strategy together, from separation to metallisation and finished magnets,” said Rahim Suleman, President and Chief Executive Officer of Neo. “The EU’s selection of Neo’s project, following the Strategic Project designation of Silmet 2.0 earlier this month, is strong recognition of that plan. This funding would help us further scale magnet production for European customers in wind energy, electromobility and industrial automation.”
CINEA’s timetable provides for the grant agreement to be signed by March 23, 2027, and Neo expects the project to take two to three years to complete. The project remains subject to final investment decisions and a final grant agreement, including legal entity validation, financial capacity, non-exclusion, ethics and security reviews.
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