LS Eco Energy is undertaking a cross-investment with Australian rare earth company Lynas to build a non-China rare earth supply chain. The plan is to reduce dependence on China by establishing a value chain that extends from securing rare earth raw materials to metal production and permanent magnet manufacturing.
LS Eco Energy (229640.KQ) said on the 27th that it had signed an agreement to mutually acquire convertible bonds (CBs) worth 30 billion won each with Lynas. Under the structure, each company invests 30 billion won in the other's convertible bonds. This investment is a follow-up to the rare earth business cooperation the two companies signed in March.
Lynas is a leading company that commercially produces rare earth raw materials on a large scale outside China. LS Eco Energy expects that through cooperation with Lynas, it will be able to stably secure the raw materials needed for rare earth metal production.
The two companies plan to jointly respond to a market environment in which demand for non-Chinese rare earths is growing, centered on the United States and Europe, due to China's rare earth export controls. Their assessment is that as supply chain stability emerges as a key variable in national security and industrial competitiveness, demand to secure non-Chinese raw materials is expanding even at higher prices.
LS Eco Energy plans to first pursue production of samarium (Sm) metal for defense use, and to expand its product lineup to include dysprosium (Dy), terbium (Tb), and neodymium-praseodymium (NdPr). Samarium is a core material for samarium-cobalt (SmCo) permanent magnets used in fighter jets, missiles, and radars.
Under this cooperation, a structure will be established in which Lynas supplies rare earth raw materials, LS Eco Energy processes them into metal, and LS Cable & System manufactures the permanent magnets. Based on this, LS Group plans to build a non-China rare earth value chain connecting raw materials, metals, and permanent magnets.
"This investment reflects both companies' commitment to jointly expanding the rare earth business," said Lee Sang-ho, CEO of LS Eco Energy. "Based on a stable raw material supply chain, we will strengthen our push into the global market."
