Estonia rare earth production runs through two facilities owned by a single operator, Neo Performance Materials (TSX: NEO / OTCQX: NOPMF), giving the country an integrated separation-to-magnet supply chain that no other European nation currently matches. The Silmet plant in Sillamäe separates rare earth oxides; the Narva plant, roughly 30km away, turns them into finished neodymium iron boron (NdFeB) magnets.
Silmet: From Soviet Uranium Site to European Separation Hub
NPM Silmet AS began as a Soviet-era uranium processing facility, operating from 1946 to 1989 and producing an estimated 98,681 tonnes of uranium before the site converted to rare earth and rare metals production. It was privatised in 1997 as AS Silmet, acquired by Molycorp in 2011, and now operates under Neo Performance Materials.
Today Silmet runs a light rare earth separation line with 2,000 tonnes per year of capacity, and is also a significant global source of niobium and tantalum, accounting for up to 10% of world tantalum supply and up to 20% of metallic niobium. In April 2026, Neo commissioned a small-scale heavy rare earth (HREE) solvent extraction line at the site, producing Europe’s first separated terbium and dysprosium process solutions made entirely within the continent. Full detail on that commissioning is covered separately at HREE Separation Europe: Neo Commissions Silmet Line.
Narva: Europe’s First Mass Producer of Sintered NdFeB Magnets
Neo opened the Narva magnet plant on September 19, 2025, positioning it as Europe’s first large-scale producer of sintered NdFeB permanent magnets. The project was backed by a €14.5 million grant from the EU’s Just Transition Fund, aimed at replacing jobs lost as Ida-Viru County winds down over a century of oil shale mining.
Phase 1 targets 2,000 tonnes per year of capacity, scaling toward 5,000 tonnes per year. As of Neo’s first-quarter 2026 results, the plant had produced its one-millionth magnet and moved past initial qualification into early operational milestones, with major European EV motor suppliers committed to 35% of the facility’s output and Bosch having finalized preliminary supply contracts. Commercial-scale ramp-up remains targeted for later in 2026 rather than fully achieved.
Feedstock for Narva’s magnets is drawn in part from rare earth oxide separated locally at Silmet, alongside broader upstream sourcing that includes established producers such as Lynas Rare Earths in Australia.
Estonia’s Position in EU Rare Earth Strategy
Narva and Vacuumschmelze’s plant in Hanau, Germany were, at the time of Narva’s opening, the only two operational rare earth permanent magnet (REPM) plants in Europe. China supplied an estimated 98% of European REPM imports and roughly 91% of global REPM supply at that point, underscoring why Estonia’s combined separation and magnet capacity carries outsized strategic weight for the bloc’s rare earth supply chain.
The Estonian Ministry of Economic Affairs and Communications has worked with Neo on expanding domestic rare earth manufacturing since at least 2021, and Prime Minister Kristen Michal spoke at the Narva opening ceremony, a level of government engagement that stands out even among Estonia’s Nordic and Baltic neighbours pursuing similar critical minerals strategies.
What to Watch on Estonia Rare Earth Capacity
Two milestones will determine whether Estonia’s rare earth position deepens through 2026 and beyond: whether Narva reaches its targeted commercial ramp-up on schedule, and whether the Silmet HREE line scales beyond pilot volumes to supply a meaningful share of Narva’s dysprosium and terbium needs. Traders and processors active in the region, including Tradium, are positioned to benefit from a maturing Estonian supply chain regardless of which milestone lands first.
Sources: European Commission Just Transition Fund; USGS Rare Earths Statistics.
Where does Estonia’s rare earth production take place?
Estonia’s rare earth activity centers on two facilities near the Russian border in Ida-Viru County: the Silmet separation plant in Sillamäe and the Narva magnet plant roughly 30km away. Both are owned by Neo Performance Materials.
What does the Silmet plant in Estonia produce?
Silmet separates light rare earth oxides and, since April 2026, has also produced separated heavy rare earth (terbium and dysprosium) process solutions from a newly commissioned line. The site is also a significant global source of niobium and tantalum.
Is the Narva magnet plant in commercial production?
Narva has moved past initial qualification into early operational milestones, including passing one million magnets produced and securing customer commitments from major European EV motor suppliers and Bosch. Full commercial-scale ramp-up is targeted for later in the year the plant opened its second year of operation; see the article body for the most current status.
How is the Narva magnet plant funded?
The Narva plant was supported by a grant from the European Union’s Just Transition Fund, part of a broader EU effort to replace jobs lost as Ida-Viru County moves away from oil shale mining. See the European Commission’s Just Transition Fund page for programme details.
Why does Estonia matter to Europe’s rare earth supply chain?
Estonia hosts one of only two operational rare earth permanent magnet plants in Europe, alongside Vacuumschmelze’s facility in Germany. Combined with Silmet’s separation capacity, this gives Estonia an integrated position in reducing European dependence on Chinese-processed rare earth magnets.
