Neo Performance Materials has been selected for up to €126 million in European Union Innovation Fund support for an expansion of rare-earth processing and permanent-magnet manufacturing in Estonia. The proposed funding would contribute to Project GAUSS, an investment of approximately €400 million aimed at increasing European production capacity across the rare-earth value chain.
The Canadian company plans to expand separation facilities at its existing Silmet operation and add metallisation and magnet-manufacturing capacity. Annual permanent-magnet output is expected to rise from around 2,000 tonnes to approximately 5,000 tonnes. Around one-third of the additional capacity is intended for European offshore-wind demand, linking the project to the market for neodymium-praseodymium (NdPr) magnets.
Silmet Expansion Integrates Rare-Earth Processing and Magnet Production
Silmet already provides strategically important rare-earth separation capacity in Europe. Project GAUSS would extend the existing operation through additional separation, metallisation and production of sintered permanent magnets.
These magnets are used in wind turbines, electric vehicles, industrial motors and defence-related applications. Integrating more processing and manufacturing at the Estonian site would reduce the need to send intermediate materials elsewhere for further processing before importing higher-value products back into Europe.
The development addresses a supply-chain vulnerability extending beyond access to mined material. China dominates significant parts of rare-earth separation, metalmaking and magnet manufacturing, meaning that even rare earths mined outside China can remain dependent on Chinese processing infrastructure.
Expanding Silmet and adding downstream production are intended to reduce this dependency while increasing the availability of European-manufactured magnets.
EU Innovation Fund Support Awaits Grant Agreement
Project GAUSS has received Strategic Project status under the EU Critical Raw Materials Act. The designation can support faster permitting and facilitate financing discussions, but it does not provide construction capital directly.
Neo’s selection for up to €126 million from the EU Innovation Fund represents a further step towards financing the project. The company has been invited to prepare a grant agreement, but the funding has not yet been contractually finalised or disbursed.
Signature of the grant agreement is targeted for 23 March 2027. The project remains subject to final investment decisions and completion of its wider capital structure. The selected EU contribution is therefore not cash already available for construction. Given the project’s estimated total cost of approximately €400 million, Neo must still establish how the remaining investment will be funded through corporate capital, debt, additional public support or strategic partnerships.
Existing Industrial Infrastructure Supports Project Development
Unlike proposed critical-minerals developments starting from scratch, Project GAUSS builds on an established industrial operation. Existing expertise, infrastructure and customer relationships could reduce execution risks and shorten the path towards commercial production. The project also illustrates the challenge of translating European strategic-project designations and public funding selections into operating industrial capacity. Neo’s next milestones include securing a signed grant agreement, completing the remaining financing package and reaching the final investment decision.
A larger European magnet supply chain could reduce manufacturers’ exposure to Chinese export controls, trade disruptions and geopolitical restrictions, while supporting investment in offshore wind, automotive manufacturing and other advanced industries.
