For Europe’s fledgling rare earths industry, 2023 started with a bang. On January 12, Sweden’s state-owned mining company LKAB declared it had discovered Europe’s largest known deposit of rare earths near the town of Kiruna, above the Arctic Circle. 

LKAB announced the news 500 metres underground, in one of its nearby mines, alongside Sweden’s Minister for Energy, Business and Industry, Ebba Busch, who said the one million-tonne body of rare earth oxides “can play a key role in securing a green transition within the EU”.

Rare earth minerals are essential to making the magnets used in motors that propel electric vehicles and wind turbines, as well as myriad electronic devices. In a January 12 statement, LKAB’s CEO Jan Moström said the so-called ‘Per Geijer’ deposit is sufficient to satisfy a large part of the EU’s future demand for manufacturing these magnets. 

 The so-called ‘Per Geijer’ deposit is sufficient to satisfy a large part of the EU’s future demand for manufacturing these magnets. 

Jan Moström, LKAB, CEO

Last year, the European Commission said the bloc’s demand for rare earths — 98% of which is met by Chinese imports — will increase fivefold by 2030. To wean the EU off its dependency on China — which according to the International Energy Agency is home to 60% of global rare earths extraction and 87% of global processing capacity — the commission wants to support the buildout of a European supply chain via its proposed Critical Raw Materials Act.

Northern Europe’s new cluster

LKAB’s discovery is the latest in a string of developments stretching from Scandinavia to the Baltics that suggest the continent’s north is taking the biggest steps towards meeting Europe’s rare earths ambitions.  

In November 2022, two months before its Per Geijer announcement, LKAB invested Nkr400m ($38.9m) in Norwegian rare earths tech firm REETec to become its majority owner. REETec has developed a separation process that is more efficient and less carbon-intensive than current industry practices. LKAB’s chief strategy officer David Högnelid tells fDi the investment was made “to increase Europe’s processing capacity for separation of rare earths”.

The capital injection will help REETec construct its first commercial-scale plant for separating rare earth elements in Herøya, in south-east Norway, which is scheduled to begin operations in 2024. REETec plans to open a second factory two years later which will process materials from LKAB’s mines. In a statement published in November, Mr Moström said the companies’ collaboration “can create the basis of a strong and sustainable Nordic value chain for rare earth metals”.

REETec’s inaugural plant will be the world’s third commercial-scale rare earth processing facility outside of China, joining Lynas Rare Earths’ plant in Malaysia and Silmet’s separation plant across the Baltic Sea in Estonia. Late last year, Silmet’s owner, Canadian firm Neo Performance Materials, announced it was expanding activities at its Estonian subsidiary to incorporate metal, alloy and magnet-making capacity. Silmet’s new operations will go some way in filling the mid-stream void in the continent’s nascent value chain. 

“Europe is consuming these magnets, but we are not consuming the raw materials needed to create [them],” says Per Kalvig, emeritus senior researcher at the Center for Minerals and Materials. 

Nor is Europe mining rare earths today. However, alongside Sweden, some of the continent’s biggest deposits have been identified in Greenland, Finland, Norway and Germany. 

Another northern European development driven by LKAB is its SKr 10bn ($944m) circular industrial park which from 2027 will extract rare earths and other critical minerals from its ores. After assessing several locations in Sweden and Norway, LKAB chose to locate the plant in the Swedish city of Luleå; however, it has left the door open to set up similar operations in other locations. “For upstream production — mining and the basic processing — I think northern Europe has a very good foothold,” says David O’Brock, REETec’s commercial director.

Hurdles, big and small

Within Europe’s nascent rare earths industry, there is cautious optimism surrounding LKAB’s discovery. Mr Kalvig says “there is no doubt the [Per Geijer] resource is huge”. He notes that the EU’s rare earth project EURare, which ran from 2013 to 2018, studied tailings from the Kiruna area and found them to be relatively rich in apatite, which contains rare earth elements.

However, he warns that despite their name, there is no scarcity of rare earths in Europe nor globally. “The issue is to develop it into an attractive business concept,” he says.

In this sense, the Per Geijer deposit benefits from LKAB’s status as Europe’s biggest iron ore miner. The group will produce rare earths as a byproduct of its existing activities, which should make them more economical as mining costs can be shared. “That’s one reason why rare earth materials that start in China can be so competitively priced — they are a secondary material to iron mining,” Mr O’Brock explains.

Mr O’Brock, who is also Silmet’s former CEO, says LKAB’s discovery “absolutely helps” Europe’s bid to build a rare earths supply chain, provided it “can get the permits and whatever else they are lacking in a timely manner to put the mine into production”. Timing, however, is not on LKAB’s side. The group plans to apply for an exploitation concession in 2023, but has warned that based on other permitting processes it will take 10–15 years to start supplying the market. 

Mr Kalvig warns that Sweden is “very strict on exploitation licences”. He points to the Norra Kärr rare earth project in Sweden’s south, which had its mining permit downgraded to an exploration permit in 2016 following a reassessment by the country’s mining inspectorate.

Moving markets

Rather than pinning too much hope on LKAB, Mr Kalvig believes Europe should focus its efforts on smaller ventures that have the potential to grow and foster a diversified industry. “I’m not convinced that one or two of these big projects will be successful in changing and taking a big share of the market in Europe,” he says. 

Market share is something LKAB is not willing to pinpoint. Mr Högnelid tells fDi that production volumes will depend on many factors, including permits and mine planning. The company says it is “already investing heavily to move forward” but is tight-lipped on the source and size of its funding. The race against time to develop the deposit has begun.

This article first appeared in the February/March 2023 print edition of fDi Intelligence.