Construction of €100-million Narva magnet factory starts this summer

Silmet magnets.
Silmet magnets. Source: ERR

Construction of an industrial magnet factory in the Eastern Estonian town of Narva starts this summer. The plant, once up and running, will bring around 1,000 jobs to the region, and will be part-financed by European Union funding.

The factory will be operated by NPM Silmet, and construction is being carried out by Silmet's parent company, Neo Performance Materials.

The magnets will have industrial applications, such as in the manufacture of electric cars and of wind turbines.

The construction will take place in phases; the first of these is due to be finished in 2025 at a cost of over €100 million, and will see around 350 jobs created.

The state will support this, via €18.75 million provided in turn by the European Union's Just Transition Fund.

Raivo Vasnu told ERR the demand for magnets in the European market is approximately 15,000 tonnes per year. "However, we also see our customers' needs which, in fact, do not tally well with the statistics. Whereas the data might say that demand will rise to 30,000 tonnes by 2028, in fact, due to increased use of electric transport, the needs of customers reveal a much faster growth."

"So any concern that there is no market there is not something we fear," he added.

Nonetheless, there are no similar factories under construction elsewhere in Europe, while Silmet seems to have a near-monopoly on input materials used in magnet making in the region.

"The raw materials for magnets, namely rare earth metals, are not produced by anyone in Europe, on an industrial scale, except by Silmet. If all our volume were to go to supply our own magnet factory - we also have to expand Silmet in order to feed that aspect - the question arises, how can other magnet factories elsewhere be supplied, without raw materials."

"The biggest supplier of raw materials in the world at the moment is China, which has the entire production capacity," he added.

There is not a major disparity in price between European and Chinese producers of magnets, he added.

The second phase of construction will be completed based on what the market situation is, he added, though the plan is to commence with it as soon as phase one is complete.

Output from phase one will be 2,000 tonnes per annum; output from phase two will be 5,000 tonnes per annum.

Stage two will cost about €250 million, he added.

The tender process for construction has commenced, in line with the requirements of Just Transition Fund use, and several bidders are interested, Vasnu went on.

Vasna also thanked both Enterprise Estonia/EAS and the City of Narva for their interest in helping to get the project moving.

The architecture and engineering process is already underway; Neo Performance Materials received a building permit from the city of Narva earlier this month, while the cornerstone is due to be laid June 28.

R&D hiring is so far proving challenging, however, in terms of attracting talent to Estonia and particularly from Western countries, Vasmu went on. "Let's say that while you can get anything for the right money, there are the everyday life questions - where would we house these people, etc. and that's a stumbling block. Nothing new has been built in our area this century, in fact. If we could bring people from somewhere to the east, while at the moment that is not possible, they would come, as they are used to this environment. But to bring a person from London to Narva - we have to offer them something particularly attractive."

Silmet currently already operates an older rare earth metals plant in Narva.


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Editor: Andrew Whyte, Barbara Oja

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