A leading original equipment manufacturer (OEM) specializing in electric vehicle traction motors has finalized a supply agreement with Magnequench Sintered Magnets, an Estonia-based subsidiary of Canada’s Neo Performance Materials. The deal ensures the OEM will receive approximately 35% of the first-phase production capacity from Magnequench’s new magnet facility in Narva, Estonia.
The Narva plant, which began construction in July 2023, is scheduled to start production in the second half of 2026 and aims to reach full capacity by the 2029 fiscal year. Initially, the facility is expected to produce around 2,000 tons per year of sintered rare earth permanent magnets, with plans to expand to 5,000 tons annually.
This facility is one of the early beneficiaries of the EU’s Just Transition fund, targeting European and North American automotive markets. It aligns with Neo’s strategy of vertical integration from “mine to magnet,” complementing their existing light rare earth separation plant in Silmet, Estonia.
Neo’s broader Magnequench business, which includes a production site in Tianjin, China, reported $87.6 million in revenue for the first half of 2023, down from $104.5 million the previous year. However, the automotive magnetics market is showing signs of recovery, and the company anticipates a return to previous production levels.
Despite the recent decline in rare earth prices, Magnequench’s margins have remained stable due to contract structures that pass through rare earth pricing. The company has also seen increased sales volumes for its heavy rare earth-free traction motors in 2023, bolstered by shifts in customer inventory ordering patterns.
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