By Eric Onstad
LA ROCHELLE, France (Reuters) – Chemicals group Solvay launched an expansion on Tuesday to regain its previous strength in processing rare earths, hoping to attract customers after China imposed new barriers.
On Friday, China implemented export restrictions on certain rare earth elements, a group of 17 minerals, as part of its sweeping response to U.S. President Donald Trump’s tariffs.
“What’s happening is an incentive to develop those regional value chains,” CEO Philippe Kehren told Reuters at the launch of the expansion of the 77-year-old plant in La Rochelle, France.
“Now let’s see if people really want to develop this value chain because if we want to invest further, we will need some comfort from the customers.”
Belgium-based Solvay has invested several million euros in an expansion that is kicking off with a low level of output, waiting for interest and orders from customers such as automakers before committing about 100 million euros ($109 million) for a full-scale expansion, Kehren said in an interview.
Four decades ago, Solvay’s rare earth processing plant in La Rochelle on France’s Atlantic coast was one of the largest in the world, but production spiralled lower over the years as China ramped up cheaper output to now account for about 90% of the world’s processed rare earths.
Solvay, which also makes chemicals such as soda ash and speciality polymers used in cars and airplanes, will initially focus its rare earth expansion on two elements needed to make super-strong magnets that power electric vehicles and wind turbines – neodymium and praseodymium.
The company eventually aims to supply 30% of Europe’s processed rare earths demand for magnets by 2030, but it depends on demand from customers.
“The issue is not capacity. We can adapt to what is needed,” said An Nuyttens, president of Solvay’s division that produces rare earth products.
“The car manufacturers, the wind turbine manufacturers, those are the stakeholders that will make this happen or not.”
Eventual production could range from 2,000 to 5,000 metric tons of rare earth oxides, but Solvay does not envisage going further down the processing chain to making rare earth metals, alloys or magnets, she added.
The 161-year-old company, like other firms seeking to compete with China, is hoping customers will pay a slight premium to diversify their supplies from China.
Solvay also wants support from the EU, whose Critical Raw Materials Act that entered into force last year set ambitious 2030 targets for domestic production of critical minerals required for its green transition – 10% of annual needs mined, 25% recycled and 40% processed domestically by the end of the decade.
($1 = 0.9170 euros)
(Reporting by Eric Onstad; Editing by Lisa Shumaker)
