EU to fund permanent magnet production line in Estonia
The European Commission has awarded Innovation Fund money to a Neo Performance Materials project that will create a rare-earth permanent magnet production line in Estonia. The company owns the Silmet plant in Sillamäe and a magnet factory in Narva.
A new permanent magnet production line is to be built in Estonia after the European Commission, the EU's executive body, agreed to back a project by Canadian-registered Neo Performance Materials. The company owns the Silmet plant in Sillamäe and a permanent magnet factory in Narva, both in Ida-Viru County in eastern Estonia. The project matters because it is meant to develop rare-earth magnet production in Europe, including supplies for offshore wind farms.
On Monday, the Commission selected 77 European net-zero technology projects to share €3.4 billion in funding. They were chosen in an Innovation Fund call for applications launched in December 2025. The money comes from revenues of the EU Emissions Trading System.
What the project involves
The project description says a rare-earth permanent magnet line will be set up in Estonia, covering separation, metallization and magnet manufacturing. It will be able to produce up to 3,000 tons of permanent magnets a year, one-third of which will go to EU offshore wind farms.
According to plans, the project will avoid more than 3.4 million tons of CO2 equivalent emissions during its first 10 years of operation.
Silmet and Russian raw materials
The Silmet plant depends on raw materials from Russia but has pledged to phase them out. It has come under scrutiny after Estonia asked for its supplier to be exempted from European sanctions.
Next steps
The final terms of the grant agreements will be made public in the first quarter of 2027. The Innovation Fund aims to channel an estimated €40 billion of Emissions Trading System revenue between 2020 and 2030 into cutting-edge low-carbon and net-zero technologies, supporting Europe's transition to climate neutrality. A methanol plant planned for Pärnu has previously received funding from the same program in Estonia.
