LS Eco Energy is establishing a production base for rare earth metals used in defense applications in Vietnam. The company aims to produce samarium, a key raw material for samarium-cobalt (SmCo) permanent magnets used in fighter jets and missiles, in a non-China region as a proactive response to U.S. regulations on Chinese rare earths.
On September 30, LS Eco Energy announced it will invest 11.6 billion won to build a facility in Ho Chi Minh City capable of producing 240 tons of samarium annually, with pilot production expected to start in December.
Samarium is essential for SmCo permanent magnets, which maintain stable magnetism at high temperatures. These magnets are primarily used in aerospace and defense sectors, where high heat resistance and stability are critical. The company estimates that this production will enable the creation of approximately 700 to 1,000 tons of SmCo permanent magnets each year.
This investment marks the first project resulting from collaboration with Australian rare earth company Lynas. The two companies strengthened their partnership in July by mutually acquiring convertible bonds worth 30 billion won each. Under this arrangement, Lynas will supply rare earth raw materials, which LS Eco Energy will process into metals in Vietnam before supplying them to LS Cable's permanent magnet factory.
Starting January 2027, U.S. Department of Defense procurement regulations will restrict the use of samarium-cobalt magnets sourced from regulated countries, including China, from the raw material extraction and production stages to the final product. As the scope of these regulations expands to include not just magnet manufacturing but also raw materials, securing a non-China supply chain for samarium becomes increasingly vital.
LS Eco Energy plans to expand its production of rare earth metals to include dysprosium, terbium, and neodymium-praseodymium in the future. The company aims to establish a supply chain that goes beyond simple raw material acquisition to include high-value metal processing and permanent magnets, targeting U.S. and global defense and advanced industry demands.
Lee Sang-ho, CEO of LS Eco Energy, stated, “I expect that South Korea, which lacks rare earth resources, can become a key player in the global supply chain through the manufacturing of high-value materials and components.”
* This article has been translated by AI.
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