INTERVIEW EMAT seeks to reduce China reliance on rare earth magnets with Pohang facility
Executives of Evolution Metals & Technologies (EMAT) and government officials pose after EMAT's KMMI unit signed an investment memorandum of understanding with Pohang and North Gyeongsang Province at Pohang City Hall, Tuesday. From left are Pohang City Council Chairman Kim Cheol-su, Pohang Mayor Park Yong-sun, KMMI CEO Cheon Yoo-heon, North Gyeongsang Province Deputy Gov. for Economic Affairs Yang Geum-hee and EMAT CEO Frank Moon. Courtesy of North Gyeongsang Province
Facility to produce 10,000 tons of rare earth magnets annually
Evolution Metals & Technologies (EMAT), a Nasdaq-listed rare earth magnet producer, is making a big bet on Pohang, North Gyeongsang Province, by building a facility capable of producing 10,000 tons of sintered rare earth magnets annually for export to the U.S. and to other global customers seeking to reduce their reliance on China's dominant rare earth supply chain.
The company plans to invest approximately 300 billion won ($224 million) in Pohang, including 223.8 billion won earmarked for building initial production capacity on a 118,000-square-meter site at the Blue Valley Industrial Complex in the city by 2027. EMAT and the Pohang city government signed a memorandum of understanding (MOU) on the investment project on Tuesday, with the city pledging administrative support for EMAT's plans.
During an interview with The Korea Times, EMAT CEO Frank Moon stressed the need to distinguish between upstream and downstream operations. Citing China's dominance in the supply chain, he said geopolitical issues weigh heavily on the industry, and customers’ growing demand for alternatives to China is positioning Korea as a key global hub for supplies.
“China produces more than 90 percent of the world's rare earth magnets, while most of the remaining output comes from Japan and is consumed domestically,” Moon said during the interview a day before the MOU signing ceremony.
“Yet even China is assumed to rely on imports for about 60 percent of its raw materials. … The rare earth magnet industry should not be about a single company doing everything from mining to magnet production. Just as POSCO sources iron ore from mining companies such as Rio Tinto to produce steel, upstream and downstream operations should be treated as separate businesses.”
EMAT CEO Frank Moon speaks during an interview with The Korea Times at a hotel in Seoul, Monday. Courtesy of EMAT
EMAT comprises four midsize rare earth companies in Korea — KCM Industry, which specializes in metals for magnet production; KMMI, which produces sintered magnets; NS World, which manufactures bonded magnets; and Handa Lab, which specializes in automation and artificial intelligence technologies.
Evolution Metals acquired the four companies and subsequently merged with a U.S. special purpose acquisition company to make its Nasdaq debut on Jan. 6. Although each of the four companies has been in business for more than a decade, Moon considers Jan. 6 the founding date of EMAT as an integrated company.
Rare earth magnets are essential components in motors and other equipment for electric vehicles (EVs), drones and actuators for humanoid robots.
Rare earth magnets can be broadly divided into two types. Sintered magnets offer stronger magnetic performance and are used in applications requiring high power, while bonded magnets have relatively weaker magnetic properties but offer greater flexibility in shape and design. Moon said global annual production of sintered rare earth magnets stands at nearly 360,000 tons, with only about 14,000 tons produced outside China, mostly by Japanese companies.
China's dominance is largely attributable to its ability to supply magnets at low prices, prompting manufacturers elsewhere to shift toward higher-value components, but Moon said this does not necessarily mean that magnet producers in other countries cannot be competitive.
“Even if the price of magnets used in a car triples, the impact on the vehicle's total production cost would be less than 1 percent,” Moon said. “Keeping costs low is important, but when it comes to strategically critical materials, having alternative sources of supply is essential to reducing geopolitical risks.”
Starting Jan. 1, the U.S. Department of Defense will expand procurement restrictions on certain magnets and strategic metals sourced from China, Russia, Iran and North Korea. Until the end of this year, the restrictions cover materials melted or produced in those countries. From 2027, however, they will extend to materials mined, refined or separated there, effectively covering the entire supply chain for certain rare earth magnets.
China is also tightening its grip on the rare earth supply chain by imposing export controls on technologies and equipment used to produce rare earth magnets, making it increasingly difficult for manufacturers outside China to expand their production capacity.
A one-year suspension of some of Beijing’s export controls on rare earths and related manufacturing equipment and technologies is set to expire in November, meaning it will become much harder for manufacturers outside China to import Chinese-made equipment.
The situation has created both opportunities and challenges for Moon. He described the process of securing machinery for EMAT's Pohang plant from China as a “nerve-wracking experience,” as any delays could have pushed back the entire project and cost the company an opportunity to capitalize on growing demand for non-Chinese magnets. Fortunately, EMAT secured the necessary export licenses for its main production equipment, which is scheduled to arrive at its Pohang facility by Thursday.
“Currently, about 30 percent of the raw materials we need are sourced from outside China, mostly from Australia,” Moon said.
“We cannot completely eliminate our dependence on China overnight. But I believe Chinese and non-Chinese supply chains will increasingly diverge because China is expected to struggle to meet its own domestic demand amid the growth of the EV market. We expect to increase the share of non-Chinese raw materials to 60 percent of our total input by the second half of next year.”
The construction site for EMAT's new facility in Pohang, North Gyeongsang Province / Courtesy of EMAT
With plans to use materials that meet U.S. defense procurement requirements, EMAT is targeting the American defense industry as a key market for its magnets. Moon said the company's board members have close ties to the U.S. defense sector, which could help EMAT establish relationships with potential customers.
While Moon serves as CEO, EMAT's board is chaired by David Wilcox, a former Deutsche Bank executive. Other board members include Christopher Miller, who served as acting U.S. defense secretary during U.S. President Donald Trump's first term; Robin Bernstein, a former U.S. ambassador to the Dominican Republic; and retired Gen. Tom Bussiere, former commander of the U.S. Air Force Global Strike Command.
EMAT is targeting $400 million in annual revenue from its Pohang facility. Moon said the company is receiving inquiries from potential customers, particularly in the EV, drone and unmanned aerial vehicle industries.
Once the facility is completed and reaches its planned capacity, Pohang is expected to account for about 90 percent of EMAT's total revenue. The company also plans to invest 127 billion won in Sejong to establish research facilities and production operations for bonded magnets.
In the U.S., EMAT is also planning to build facilities for electronic scrap processing, battery recycling and hydrometallurgical and pyrometallurgical refining.