Rare earth magnets, the technological marvel powering electric vehicles and wind turbines, will soon be “Made in EU”. Estonia plays a cornerstone role in these efforts with the construction of the new factory on the outskirts of Narva. After construction started on €100M project last year, there’s now a new positive development, as Neo Performance Materials secured a $50M loan to complete the plant.
“It will service the growing demand for localised, parallel supply chains, shaping the future of EV manufacturing in Europe and North America,” said Rahim Suleman, Neo President and Chief Executive Officer.
The Toronto-based company struck a deal with Export Development Canada to finance its Narva facility, marking a decisive step in Europe’s bid to break Asia’s grip on critical component manufacturing. Located in mineral-rich and industrial-friendly East Estonia, the plant represents Europe’s first major venture into rare earth magnet production.
The loan arrives as Neo has already invested over €20M in the project, with the European Union earlier providing a massive grant through its Just Transition Fund. The financing package splits into two US$25 million tranches, each maturing in five years, with principal repayments starting after two years. Interest rates will track the secured overnight financing rate plus a margin.
Neo’s strategic placement of the facility next to its existing rare earth separation plant in Sillamäe creates an end-to-end manufacturing hub. Initial production targets 2,000 metric tons annually, enough to power roughly 1.5 million electric vehicles. Future expansion could triple that output. According to previous estimates by Neo’s execs, the project could potentially grow to over €250M in total investment.
For Estonia’s industrial Ida-Viru region, previously dependent on oil shale mining, the plant represents more than just manufacturing capacity, acting as a catalyst for attracting additional high-tech industry to the area. Production is slated to begin in 2025, as Western manufacturers race to reduce their reliance on offshore suppliers for these critical components. The timing aligns with Europe’s accelerating EV production and ambitious offshore wind energy targets – both sectors heavily dependent on rare earth magnets.
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