A new permanent magnet production line will be built in Estonia after the European Commission agreed to fund a project from Neo Performance Materials, which owns the Silmet plant and a magnet plant in Ida-Viru County.
On Monday, the European Commission selected 77 European net-zero technology projects to receive a total of €3.4 billion in funding from the Innovation Fund call for applications launched in December 2025.
Among the funding recipients is Canadian-registered Neo Performance Materials, which owns the Silmet plant in Sillamäe and the permanent magnet factory in Narva, both located in eastern Estonia.
The Silmet plant, owned by Neo Materials, is dependent on raw materials from Russia but has pledged to phase them out. The plant has come under scrutiny after Estonia requested that its supplier be exempted from European sanctions.
"The project will establish a rare-earth permanent magnet production line in Estonia, covering separation, metallization and magnet manufacturing. The line will be capable of producing up to 3,000 tons of permanent magnets annually, one-third of which will be supplied to EU offshore wind farms," the project description states.
According to plans, the project will prevent the emission of more than 3.4 million tons of CO2 equivalent during its first 10 years of operation.
The funding will come from the Innovation Fund, using revenues from the EU Emissions Trading System (ETS).
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 in revenue from the EU Emissions Trading System between 2020 and 2030 into investments in cutting-edge low-carbon and net-zero technologies to support Europe's transition to climate neutrality.
A methanol plant planned for Pärnu has previously received funding from the same program in Estonia.
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