Neo Performance Materials reported strong profit increases in its full-year financial report for 2024, issued March 18. Highlights for its Neo Magnequench unit included a solid gain in earnings despite lower revenues, and continued progress in the construction of its new permanent magnet plant in Europe. In a separate announcement, the company reported on April 1 that as part of a corporate streamlining effort it completed the sale of most of its interest in a rare earth separations operation in China for about $28 million to an affiliate of Shenghe Resources.
The new permanent magnet facility in Estonia remains on track for a grand opening in 2025 with commercial production set to begin in 2026. Neo has already secured a major Tier 1 automotive supplier award ahead of the facility’s completion, the company noted, reinforcing strong demand for its permanent magnets and validating its strategic expansion.
According to the financial reports, company-wide earnings grew more than 70% led particularly by its Rare Metals business unit where they more than doubled and by the Magnequench business unit where they rose 21%. Despite the higher earnings, Magnequench revenues were lower for the year, coming in at $176 million at year-end 2024 compared to $213 million at year-end 2023. Operating Income was $10 million compared to $7 million. Earnings were $25 million compared to $21 million.
Considered by many analysts to be a bellwether of the permanent magnet market, Magnequench’s revenue decline came amidst a two-year drop in rare-earth magnet prices globally, a situation that may ease in 2025, particularly, as China slows its mining of rare earth minerals to protect prices for domestic producers and as demand rises.
Nevertheless, Magnequench delivered robust growth in 2024 with sales volumes increasing by 9% for the full year, driven by strong demand in bonded permanent magnets and bonded powders in traction motor applications. The segment continues to capitalize on key growth areas while optimizing cost efficiencies, leading to improved profitability.
Significant developments and key performance drivers included:
- Bonded magnet sales delivered record volumes up 23% for the full year.
- Bonded powders in traction motors delivered growth and won next generation product platform.
- Reduced conversion costs by 20% for the full year at its largest facility.
- Earnings increased by $4.4 million, or 21% compared to the prior year.
“We maintained a strong balance sheet with a net cash position, supported by healthy cash flow generation and working capital improvements,” noted Rahim Suleman, CEO. “At the same time, we took decisive action to streamline our portfolio, divesting our rare earth separation assets in China, subject to closing conditions. This aligns with our strategy to reduce earnings volatility and focus on high-value-add growth business.”
“With a reinforced foundation, Neo is positioned for long-term growth as we expand our permanent magnet capabilities to meet accelerating demand, creating lasting value for our shareholders,” he said.
Rare earths processing operation in China sold to Shenghe Resources
The deal in China transacted 86% of the equity interest in Jiangyin Jiahua Advanced Material Resources Co., Ltd. (JAMR) for $24.6 million cash, and 88% of the equity in Zibo Jiahua Advanced Material Resources Co., Ltd. (ZAMR) for $3.4 million cash.
“The sale of our majority interest in JAMR and ZAMR contributes to the streamlining of our business, while ensuring that our clients continue to benefit from this strategic partnership. Shenghe is a rare earth industry leader and has a record of commercial excellence by driving value from midstream assets. Shenghe’s established global sourcing platform allows for continued growth of JAMR and ZAMR while we shift Neo’s focus to downstream high-margin products,” said Suleman.
“We look forward to building on Neo’s growth of JAMR and ZAMR. Both will be integrated into our existing midstream assets in China and will play a vital role in our global platform. We look forward to continuing to work with Neo on their downstream needs and growth of both companies,” said Huang Ping, the acting Deputy Chairman of Shenghe.
Neo retains a 9% equity interest in JAMR and a 10% equity interest in ZAMR and has executed an agreement securing the exclusive right to distribute JAMR’s heavy rare earth products outside of China for an initial term of five years. This is expected to provide Neo’s customers outside of China with continuity of supply for premium products like dysprosium for multi-layer ceramic capacitors and medical-grade gadolinium.
JAMR has been a continuously operating asset of Neo for three decades, producing specialty heavy rare earth products for global markets. Now, the transaction helps free up working capital to further pursue its downstream strategy, also to reduce earnings volatility since rare earth separation is the process step with the highest exposure to underlying rare earth price volatility.
Shenghe is a leading rare earths company in China, with over 20 years of experience and numerous holdings internationally. It operates with a mixed ownership structure, characteristic of the Chinese rare earths industry. The largest shareholder is the nation’s Ministry of Natural Resources.
For more info, see www.neomaterials.com and www.shengheholding.com.
