Solvay announced that the company will extend its rare earth separation capabilities to permanent magnet materials through an expansion at its La Rochelle plant in France.

The rare earths business of the La Rochelle plant focuses on cerium and lanthanum catalyst products, amongst other select higher-value applications. China used to be the major source of rare earth feed for the plant, but since 2013 the majority has come from Lynas’ Malaysian plant, LAMP. By far, Japan is the largest importer of rare earth products from Solvay, with Europe and the USA also key destinations.

Catalysts were previously the market-leading application for rare earths, driving the overall supply and demand fundamentals of the industry. With the growth in new-energy applications, permanent magnets took over that role in the first half of the 2010s. The same narrative that is set to jolt permanent magnet demand over the energy transition period (electric vehicles and renewable energy) is having the opposite impact on catalyst demand. According to Project Blue data, the resulting bearish outlooks on auto catalysts and internal combustion engines will put further strain on the already high surplus cerium and lanthanum supply issue of the rare earth market.

Currently, Europe and USA are in a political drive to build supply chains that relieve the reliance on China as a supply source for rare earths and their functional products. Solvay, as one of the larger consumers and refiners of rare earth compounds in Europe, is well placed to build on its existing supply chains and the move to capture value from permanent magnets is in line with demand forecasts of the different rare earth elements. However, with Lynas involved in developing rare earth separation capacity in the USA, will Solvay need to look elsewhere for feedstock in future? And while the capacity to produce the final magnet products lags separation capacity projects (not to mention the metal part of the supply chain), are producers open to selling separated compounds into China in the interim, which continues to stretch its lead downstream for value-add gains?