Highlights
- Estonia’s Silmet factory, formerly a Soviet uranium plant, is now Europe’s leading rare earth processor under Neo Performance Materials.
- Neo Performance Materials announces operational transformation at Silmet, moving away from midstream to downstream rare metals production.
- The shift aims to diversify supply, reduce working capital, and improve environmental footprint while targeting European electric car and wind turbine industries.
At one time a Soviet-era uranium processing plant, the Silmet factory in Sillamäe, Estonia (opens in a new tab), is now Europe’s leading processor of rare earths. Silmet’s mother company, Toronto-headquartered Neo Performance Materials (opens in a new tab), seeks to develop the European continent’s first manufacturer of high-performance magnets for the European market.
Producing “permanent magnets” could represent serious potential to make a huge impact in the European electric car and offshore wind-turbine industries. Up to this day global markets for rare earths are heavily dependent on China. See the New Eastern Europe (opens in a new tab).
By the end of 2023 the Canadian company (Neo Performance Materials Inc. (TSX: NEO**)** announced a manufacturing strategy (opens in a new tab) execution with respect to Rare Metals operations at the NPM Silmet OÜ plant in Sillamäe, Estonia (“NPM Silmet“).
This shift in focus away from midstream toward downstream operations is expected to diversify feedstock supply, reduce working capital requirements, and reduce volatility by lowering inventory volumes and holding times.
Starting in late December 2023, NPM Silmet purported to update its manufacturing processing of Niobium and Tantalum to improve business performance of its high-purity rare metals production. NPM Silmet will shift further downstream in its value-add operation, by halting the energy-intensive hydrometallurgical processing of Niobium- and Tantalum-bearing ores.
Furthermore, the company announced future products would be derived from oxides and recycled materials. Neo has completed testing of these purchased oxides and has entered into numerous sourcing agreements for these input materials.
This focus is expected to enable Neo to improve return on capital employed while better aligning material purchases with underlying customer demand for higher-value products. In addition, it is expected to deliver the following benefits:
- increase supplier base and sourcing optionality.
- reduce working capital requirements and inventory on hand.
- decrease price volatility.
- simplify the manufacturing process; and
- improve environmental footprint from reduced energy consumption and wastewater generation.
It is anticipated that the Rare Metals unit’s operational transformation will result in streamlined business processes. In connection with this production re-alignment, Neo reported it would take a charge to its fourth quarter net income/(loss), including approximately US$2 to $3 million non-cash charge for impairment of assets and less than US$1.5 million of employee restructuring costs.
In addition, savings from working capital reductions are expected to offset the restructuring and transition cash costs in less than a year with operating income improvements delivered on an ongoing basis.
The Company
Neo Performance Materials Inc. was founded in 1994. The company is based in Toronto, Ontario, Canada.
Neo Performance Materials is a chemical manufacturing company that specializes in rare earths, rare metals, and other advanced materials. Their products are used in a variety of technologies, including electric vehicles, high efficiency appliances, and water purification.
The company is traded under the symbol NEO traded on Toronto’s stock exchange at $7.86, their market capitalization as of this writing is $328.16 million. The company expects $495.32 million and $3.43 million in profit. They currently store about $100.48 million in the bank.
Insiders hold about 22.38% of the company stock according to Yahoo Finance.
Daniel
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