Posco partners with U.S. rare earth company to build $200M production facility

Posco International is partnering with a rare earth refining company to build a $200 million production facility in the United States, as Korea seeks to reduce its dependence on China-dominated supply chains for critical minerals used in EVs, robots and AI infrastructure. 

The local trading and energy giant said Friday that it had signed an agreement the previous day with U.S.-based ReElement Technologies Corporation in Washington, D.C., to establish a joint venture for rare earth separation and refining production in the United States.

The two companies are set to build a rare earth separation and refining plant with an annual production capacity of 6,000 tons. Posco will hold a controlling stake and oversee management of the joint venture, while ReElement will provide core refining technology. 

The companies also aim to eventually build an integrated production complex capable of manufacturing permanent magnets, a critical component used in electric vehicles, robots and AI data centers. 

The partnership marks a broader industrial cooperation effort between Korea and the United States to diversify the global rare earth supply chain, which is heavily concentrated in China. Rare earth materials, particularly heavy rare-earth elements such as dysprosium and terbium, are critical for advanced industries including EV motors, robots and AI data centers.

China dominates the worldwide production of powerful industrial magnets — specifically those made from a rare metal called neodymium — making up 92 percent of the world's supply, according to a report by the Korea International Trade Association. Heavy rare earths such as dysprosium are produced entirely in China as well. 

Industry observers also expect the joint venture to adopt a more environmentally friendly refining process than conventional Chinese methods. Separating rare earth elements is widely considered more technically difficult than mining them. ReElement Technologies, however, has developed a water-based ion chromatography technology that separates rare earth elements individually based on differences in extraction timing. The method is considered simpler and more environmentally friendly than China’s conventional process, which relies heavily on toxic solvents.

Posco said it is currently scouting locations for the facility. In the first phase, the plant plans to produce 3,000 tons of refined rare earth materials annually before expanding to 6,000 tons in a second phase. If the project proceeds as planned, pilot production is expected to begin in the fourth quarter of next year, with full-scale commercial production targeted for 2028.

Initially, the plant will produce neodymium-praseodymium oxide — a key material for permanent magnets — as well as heavy rare earth oxides. The company added that it plans to later expand into permanent magnet manufacturing.

Shinhan Securities described the project as “an opportunity to secure a clear non-China supply chain premium in the permanent magnet market dominated by China.”

Posco said it also plans to secure raw materials through mining investments in Southeast Asia while accelerating efforts to build an integrated value chain with ReElement Technologies in the United States, spanning rare earth refining to permanent magnet production.

“The combination of both companies’ global supply chain capabilities and innovative refining technologies will create significant synergy,” Posco International CEO Lee Kye-in said.

BY LEE SU-JEONG. [[email protected]]