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Building the value chain & Just Transition Fund

Striving for climate neutrality is an opportunity to improve Estonia´s energy security, make Ida-Viru County's economy more sustainable, encourage new investments in the region and increase the competitiveness of companies.

Estonia's Just Transition Fund (JTF) plan focuses on two strands, "Economy and labor" with €273 million and "Environment and social inclusion" with €66.74 million of triggering measures.

More information

  • €354M from the European Commission's Just Transition Fund
  • #1 member in the EU to be qualified to distribute JTF
  • by 2050 aim to achieve climate neutrality
  • 1st project with Neo Performance Materials being implemented

First JTF project in the EU – case study

Neo Performance Materials (Neo) received the first-ever grant (up to €18.7 million) under Europe’s Just Transition Fund for Neo’s planned sintered rare earth magnet manufacturing plant in Estonia.

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The grant to Neo is the first such award to any critical materials company in the EU under the JTF program. Neo Performance Materials has chosen Estonia as its new production and R&D base for its strategic growth areas. This also contributes to supporting the green energy transition in Europe.

Developing the value chain

Separated oxides that come out of NPM Silmet are used to make magnets. Its facility in Sillamäe, Ida-Virumaa is currently the only industrial-scale rare earth separations plant in full-scale operation in Europe. Rare earth metals are a raw material to produce magnetic metals, which in turn are one of the main inputs to produce both permanent magnets and microchips. They are found in computers, electric cars, industrial robots, and electric wind turbines.

The Neo magnet factory project is a €100 million facility, which will be built in the city of Narva by the rare earth metals producer Silmet. The factory will produce magnets with a yearly capacity of 1,500 tons.

Estonian-made magnets will be used in various applications, including electric equipment, generators, speakers, scientific equipment, wind turbines, and hybrid and electric vehicles.

The next steps to develop the value chain in the area would be:

  • Manufacturing of motors that use permanent magnets;
  • R&D for motor optimization.

It refers to:

  • Manufacturers of drivetrain motors;
  • Rotor manufacturers of offshore wind turbines;
  • Manufacturers of water circulation pumps.

The demand for magnets is growing as the world moves towards a clean energy future. The aim is to contribute to the development of the value chain of rare earth metals, including green technologies so that a strong ecosystem of the rare earth metals industry in Estonia is created.

Neo Performance
3D rendering of Neo’s plant to be built in Narva, Ida-Virumaa

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Frequently asked questions

We have gathered a list of frequently asked questions to help you understand the workings of the Just Transition Fund, as well as the region of Ida-Virumaa more thorughly.

  • What is the current status of infrastructure in Ida-Viru County?

    The region is characterized by low manufacturing setup costs and the presence of supporting industries, highly developed infrastructure, and a smooth transportation system with inland transport, rail connections, and ports. Ida-Viru County is a great location for European enterprises that are looking for a nearshoring relationship to bring manufacturing closer to their customers and to make the supply chain more predictable and transparent.

    Important strategic assets include:
    Tartu University Narva College, Coding School kood/Jõhvi, Sillamäe free trade zone, Port of Sillamäe, Port of Kunda, several industrial parks, etc.

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  • Which companies are the biggest players in the region?

    NPM Silmet, VKG, Aquaphor, Hanza Mechanics, Fortaco, Eastman Specialties are among the heavyweights and major employers within the Ida-Viru region.

    Neo Performance
    Rendering of Neo’s new plant to be built in Narva

  • Who is the grant for Ida-Viru County aimed at?

    The grant can be applied by companies entered in the Estonian Commercial Register whose area of activity is among following areas:

    • mining;
    • manufacturing;
    • supply of power, gas, steam, or conditioned air;
    • information and communication;
    • professional, scientific, and technical activities.

    More detailed information can be found here.

  • What is the timeline of the Just transition Fund?

    The Just Transition Fund resources are quite demanding in terms of calendar, as a substantial part of the funding must be invested by the end of 2026.

  • Why are rare earth elements so important, taking into account economic developments and the state of industry?

    Rare-earth elements (REE) are necessary components of more than 200 products across a wide range of applications, especially high-tech consumer products, such as cellular telephones, computer hard drives, electric and hybrid vehicles, etc.

    98% of the rare earth elements we need come from a single supplier, China, and this may prove not sustainable for the rest of the world. As an example – 78% of the US rare earth metals come from China, and the next largest supplier with 6% is Estonia.

  • What is the role of the European Raw Materials Alliance?

    The European Raw Materials Alliance has grown to over 450 members, from Greenland to Australia. This group is expected to help coordinate and direct funds to the supply chains need to support the energy and technology transition envisioned for the EU. Sustainable, responsible, and resilient value chains to boost Europe’s green and digital transition.

Contact us

Regional advisor

Ilmar Branno

Director of Regional Business Development
in East Estonia
[email protected] +372 5850 5150

Business development

Stig Rogenbaum

Deputy Director of Business Development [email protected] +372 503 7300

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