A leading original equipment manufacturer (OEM) specializing in electric vehicle traction motors has signed a significant supply agreement with Magnequench Sintered Magnets, an Estonia-based subsidiary of Canada’s Neo Performance Materials. Under this deal, the OEM will secure approximately 35% of the initial production capacity from Magnequench’s new magnet facility in Narva, Estonia.
The Narva plant, which broke ground in July 2023, is expected to begin production in the second half of 2026, with plans to reach full capacity by the 2029 fiscal year. The facility will initially produce around 2,000 tons of sintered rare earth permanent magnets annually, with future plans to expand output to 5,000 tons per year.
This facility is one of the early recipients of the EU’s Just Transition fund, which aims to support the European and North American automotive markets. The project fits well with Neo’s strategy of vertical integration, covering the entire process from “mine to magnet,” and complements their existing light rare earth separation plant in Silmet, Estonia.
Neo’s broader Magnequench business, which also 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, with the automotive magnetics market showing signs of recovery, the company expects to return to its previous production levels.
Despite the recent decline in rare earth prices, Magnequench’s margins have remained stable, thanks to contract structures that pass through rare earth pricing. The company has also experienced increased sales volumes for its heavy rare earth-free traction motors in 2023, driven by shifts in customer inventory ordering patterns.
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