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09/10/2024
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Solvay aims to alleviate Europe’s dependence on China for rare earth elements and permanent magnets

Rare earth elements and semiconductors have become as crucial to national development as oil and petroleum products once were. Amid ongoing competition between the U.S. and China, the latter controls 90% of the global supply of rare earths, turning these elements into potential geopolitical leverage.

China’s Civilian-Military Integration Strategy seeks to advance its technology, evade U.S. sanctions, and use rare earths to disrupt global manufacturing supply chains, affecting many countries, including the U.S. and the European Union.

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Due to China’s restrictive practices, nations are now exploring domestic sources of rare earths or alternative supply chains. In response, the Belgian chemical group Solvay has pledged to help meet Europe’s needs for rare earth metals used in permanent magnets and electric vehicles.

According to a Reuters report, Solvay plans to begin production at its refurbished plant in La Rochelle, France, in early 2025. The company aims to supply 30% of Europe’s permanent magnet requirements by 2030. This plant is currently the only facility in Europe capable of processing both light and heavy rare earth materials on an industrial scale.

Solvay’s timing aligns with the EU’s push to reduce reliance on Chinese imports and boost domestic production. The company is negotiating with leading European car manufacturers and turbine makers to secure orders. Solvay also reported a stronger-than-expected core profit for the second quarter, with earnings before interest, taxes, depreciation, and amortization reaching €272 million, surpassing the €261 million forecasted by analysts.

In parallel, the EU has introduced a new law with ambitious targets for mineral production. By the end of the decade, the EU aims to mine 10%, recycle 25%, and process 40% of its critical minerals domestically. Additionally, no more than 65% of rare earth supplies should come from any single country.

Permanent magnets, crucial for electric vehicle motors, batteries, wind turbines, and various electronic devices, are primarily made from rare-earth elements like neodymium and dysprosium. An EU study has highlighted China’s dominance in the production of these essential materials, leaving Europe heavily reliant on imports. Philippe Kehren, Solvay’s Chief Officer, noted that the global shift to sourcing rare metals from regions outside China was inevitable due to China’s strict regulatory environment. He predicted that “regionalization” would become increasingly significant for customers. New regulations for the Chinese rare earths industry, set to take effect in October, are expected to push other players to develop mining operations in other regions.

China continues to dominate the rare earths market by extracting and processing these valuable resources domestically. However, recent Chinese government measures have aimed to tighten control over its rare earths sector, further influencing global dynamics.

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