In conversation with NEO Performance Materials CEO and President Rahim Suleman 

NEO Performance Materials (NEO), a Canadian company with 30 years of rare earths industry experience, officially opened its rare earth permanent magnet (REPM) plant in Narva, Estonia, with a high-level ceremony on September 19, with Benchmark in attendance. The Narva plant marks NEO’s second rare earth facility in Estonia, complementing its established Silmet rare earth processing operation in Sillamäe. Before the ceremony, Benchmark sat down with NEO CEO and President Rahim Suleman to learn more about the company and its position in the midstream and downstream segments of the global rare earths supply chain, as well as the outlook for REPMs in the current tense geo-economic context.

NEO has a globally diversified asset base across Europe, North America, and Asia, including operations in China and South Korea. Its operations range from rare earth separation and refining through to magnetic powders and magnets integration, which Rahim Suleman argues makes NEO “currently the most fully integrated REPM company in the world and very well positioned with its supply chains both in and outside of China.”

The Narva plant focuses on neodymium-iron-boron (NdFeB) magnets and is currently operational at the sample production stage, planning to ramp up to reach Phase 1 production of 2,000 tonnes by Q2 2026 and subsequently to 5,000 tonnes per year. In terms of REE feedstock, Suleman explains that NEO relies on a wide variety of global upstream sources, including Lynas Rare Earths, an Australian rare earths miner and processor. NEO’s magnet plant also sources rare earth oxide locally from NEO’s Silmet separation plant in Sillamäe, one of the few such facilities outside of China.

While NEO’s Narva plant and Vacuumschmelze’s (VAC) plant in Hanau, Germany, are the only two operational REPM plants in Europe, several companies are building REPM manufacturing facilities in the US, including MP Materials. Both the US and the EU seek to reduce their heavy dependence on REPM imports from China, which currently provides 98% of European REPM supply and 91% of global supply.

REPMs sit at the intersection of economic security, defence and the green transition, given that they are critical components for electric vehicle (EV) and wind turbine motors, as well asmodern defence technologies like F-35 fighter jets and Tomahawk missiles. China’s near monopoly in REPM production makes supply chains in the US and the EU vulnerable to geopolitical tensions, as seen with China’s export restrictions on seven medium- and heavy REEs and permanent magnets in April this year. This has led toheightened price volatility, with ex-China prices having surged, as captured byBenchmark’s recently launched ex-China price index. While holding a Made-in-Europe NEO permanent magnet, EU Commission President Ursula von der Leyen at the recent G7 summit in Kananaskis, Canada, urged the need to loosen China’s grip on rare earths and REPM supply chains through supply diversification.

Despite the current tense geo-economic environment, Rahim Suleman emphasised that NEO’s primary focus remains the automotive industry rather than defence industrial supply chains. Furthermore, Suleman is a strong believer in the need for “parallel supply chains and balanced co-dependence”, but not in ‘China decoupling’, illustrated by NEO’s global corporate footprint outside and inside China, which started 30 years ago at NEO’s foundation.

As for NEO’s European supply localisation strategy, Suleman underlines that it is primarily driven by the need to serve NEO’s local automotive customer base. This is supported by the implementation of the EU Critical Raw Materials Act (CRMA), funding from the EU Just Transition Fund and driven by Estonia’s cost-effective and competitive business environment, which is largely characterised by its strong technical skill set. Additionally, the cost premium of producing REPMs locally in Estonia vis-à-vis China is not overly punitive and does not meet the same level as with European battery supply localising, according to Suleman.

Although REPMs are currently increasingly linked to defence technologies, e-mobility is the largest driver of REPM demand and will remain so in the run-up to 2035, with Europe accounting for 19% of global REPM e-mobility demand after China this year. In 2025,demand for rare earths in EV motors is also expected to increase by 16% year-over-year to 43 kt.The most common magnets used are made by combining neodymium with iron and boron to create NdFeB magnets.

Finally, NEO CEO and President Rahim Suleman explains that the EV transition is not the sole determining factor for NEO’s business and growth strategy, referring to other promising end-markets for REPMs, such as data centres driven by the AI boom and robotics, which will actually outgrow the EV transition, he argues.