Neo Performance Materials, considered a bellwether of the permanent magnetics industry, has named a new president in concert with the upcoming retirement of its CEO and long-time leader Constantine Karayannopoulos and, in rapid succession, recently consummated two deals that further its mines-to-magnets vertical integration strategy:
- By acquiring SG Technologies Group Ltd (SGTec) in the UK, Neo moved further up the value chain and expands its specialty manufacturing footprint in Europe to better serve rapidly growing magnet demand from the electric vehicles, electronics and clean energy industries.
- In Greenland, it progressed another step in developing its own rare earths mine as the government approved transfer of an exploration license from Hudson Resources of Canada, clearing the way for Neo to acquire it.
Neo announced on May 12 that Karayannoupoulos will retire from the company and its board of directors on July 7, after leading it for more than 25 years, most recently as chief executive officer for the last three years. Rahim Suleman, currently the president and Interim chief financial officer, will succeed Karayannopoulos as CEO upon his retirement.
Suleman became president of Neo in January 2023, after serving as executive vice president and chief financial officer since January 2017. Previously he was chief financial officer at Stackpole International, a global provider of fluid power systems and powder metal technology from 2010 through to 2016.
“I would like to thank Constantine for his leadership, vision and mentorship,” said Suleman. “Constantine has strengthened the capabilities of the company and helped to build a strong foundation for our continued success.”
“Neo’s continuing geographic expansion and vertical integration up the rare earth value chain in Europe – as evidenced by our recent acquisition of SGTec’s magnet manufacturing facility in the UK and our groundbreaking this summer on a new state-of-the-art plant in Estonia to produce rare earth magnets for electric vehicles – illustrate our intense focus on moving quickly to capitalize on growth opportunities where we can expand and advance our product offering and into new applications and markets.”
SG Technologies acquisition
Neo announced on April 18 the acquisition of a controlling interest in SGTec, one of Europe’s leading
advanced, specialty manufacturers of rare-earth-based and other high-performance magnets for industrial and commercial markets. The purchase further expands Neo’s rare earth processing and magnet manufacturing footprint in Europe in strategic alignment with its plans to launch production in 2025 of sintered rare earth magnet manufacturing in Estonia for the electric vehicle, electronics, energy-saving specialized motor applications and other markets.
With over 200 employees working just outside of London, SGTec was first established in the 1940s as an aluminum-nickel-cobalt permanent magnet manufacturer. Today, it produces a variety of high-performance magnets and magnetic assemblies for some of the world’s leading brands in electric and hybrid vehicles, multi-fuel and medium-duty engines, hydrogen fuel cell vehicles, off-highway fuel systems, automotive systems, and consumer electronics. It is recognized as a leader in the production of fully dense bonded neodymium-iron-boron magnets, soft magnetic composites for high-speed solenoids and electric motor applications, and other high-performance magnets. For example, non-rare earth magnets made by SGTec for automotive fuel injectors are helping vehicle manufacturers prepare to meet new and more stringent vehicle air emissions standards under the proposed Euro 7 standards.
Neo acquired a 90% interest in SGTec with an initial payment of $13.4 million plus future earnout considerations of up to another $6.7 million in performance payments. The remaining 10% of SGTec will continue to be owned by members of its senior management team.
“I am very pleased to welcome the many outstanding engineers, scientists, and professionals at SGTec into Neo’s global team, whose decades of experience, know-how, and leading-edge R&D will unlock unique synergies working as a unit with our world-class magnetics division,” said Karayannopoulos as the present CEO of Neo. “This combination is highly complementary to Neo as we continue to move up the value stream. It expands our magnet manufacturing and product development footprint in Europe. It brings us in closer proximity to key customers in Europe, which facilitates more efficient production supply chains. Finally, this combination will help us increase our exposure to new markets and high-growth applications.”
“Neo Magnequench has served as a proud supplier of magnetic powders to SGTec for more than two decades, and we recognize the significant value and growth potential that SGTec brings to Neo Magnequench,” added Greg Kroll, Neo executive vice president and head of its Magnequench business unit. “SGTec is known in the industry for its decades-long uninterrupted track record of R&D commercialization and reputation for its exceptional product quality, its technical skill and ability to meet extraordinarily challenging tolerances and performance specifications, and its creativity and product innovation. The SGTec team will very nicely augment the skill sets of our teams at Magnequench and help us to accelerate our effort to serve rapidly growing markets across Europe and elsewhere.”
Neo continues to advance its plans to construct and operate a sintered NdFeB magnet manufacturing facility outside of Narva, Estonia, located near its rare earth separations and rare metal production facility in Sillamae. Neo expects to launch Phase 1 production of 2,000 tons per year of NdFeB magnet block in Estonia starting in 2025. As commercial discussions with magnet customers indicate significantly higher demand than the Phase 1 production plans, Neo intends to expand production to Phase 2 levels of 5,000+ tons per year thereafter. The company plans to break ground on the new plant this year.
Greenland rare earths exploration effort advances
On April 24, Neo jointly announced with Hudson Resources they have received approval from the Government of Greenland for transfer of an exploration license covering a portion of the Sarfartoq Carbonatite Complex in southwest Greenland. Neo has completed the purchase of the license from Hudson for $3.5 million plus potential earnouts from future sale proceeds.
The License will be transferred to Neo North Star Resources, a special purpose entity established to fund exploration of the project. NNSR is majority-owned by Neo with significant investment from Weston Energy III LLC, a portfolio company of Yorktown Partners LLC. NNSR has initiated exploration activities and intends to raise additional capital as necessary to complete its initial exploration program for the project.
NNSR has also entered into an offtake agreement with Neo’s affiliate, NPM Silmet that gives it rights to purchase up to 60% of the ore or mineral concentrate produced from the project, thus enabling Neo to secure access to a long-term supply of rare earth materials and to further diversify its global rare earth supply chain. The materials procured under the offtake will be used as feedstock for Silmet’s rare earth separation facility in Sillamae which is the only industrial scale, commercially operating rare earth separation facility in the western hemisphere.
Silmet intends to produce magnetic rare earth oxides to supply raw materials for a new sintered rare earth permanent magnet manufacturing plant that Neo plans to build and operate in nearby Narva.
The project hosts a mineral deposit enriched in neodymium and praseodymium, two essential elements for rare earth permanent magnets. The License covers a portion of the large Sarfartoq carbonatite complex that also hosts Hudson’s ST1 rare earth elements project and the Nukittooq Niobium-Tantalum project.
“We are very pleased to complete this transaction with a global leader in the production of advanced materials like Neo,” commented Jim Cambon, president of Hudson, which is based in Vancouver, Canada. “As the world faces critical shortages of rare earth elements outside of China, we are pleased to help bring the Sarfartoq project a step closer to commercial reality and provide almost two decades of operating experience in Greenland to the Neo team.”
“Neo continuously pursues supply chain optionality in order to ensure that our customers have a dependable supply of engineered rare earth products,” said Karayannopoulos. “Once in production, this project will significantly increase the diversity of global rare earth supply for our processing facilities around the world. It also is another step in our magnets-to-mine vertical integration strategy. Based on our significant experience in assessing strategic mineral resources around the world, we believe the Sarfartoq project in Greenland is a strategic asset that uniquely complements Neo’s European rare earth magnet growth strategy. This project is also expected to supplement our current supply of rare earth concentrate coming from Energy Fuels in the United States. We are very confident and supportive of the Greenlandic government’s vision for sustainable-focused mining as the driver of their economic development, job creation, and growth. We are looking forward to working with Greenland to responsibly develop this resource into a producing mine, of which Neo would be the primary customer.”