LKAB Gets Luleå Rare Earths Go-Ahead

The promise of clean power and the reality of modern defence both run through the same awkward supply chain. Electric car motors, offshore wind turbine generators and precision-guided missiles all need permanent magnets made from rare earth elements. Europe uses thousands of tonnes of these materials each year and produces none of them at home. It imports 95% of its rare earths, with China controlling roughly 70% of EU supply and up to 90% of global processing. On May 26, a Swedish court gave environmental approval to a project that could begin, slowly, to change that.

Treasure in the Tailings

LKAB, Sweden's state-owned iron ore giant, has been cleared to build an industrial park for critical minerals in Luleå, above the Arctic Circle. The starting point is not a new seam of ore but old mining waste: apatite, a phosphorus-rich mineral LKAB has been discarding from iron ore production for more than a century. Inside that apatite are all 17 rare earth elements, including the materials needed for the magnets at the centre of Europe's green and defence plans.

The process is simple enough on paper. Ground apatite is dissolved in acid, releasing rare earth ions along with phosphorus and calcium. The rare earths are then concentrated into a mixed compound through repeated precipitation and filtration, while the phosphorus is recovered separately for fertiliser. A demonstration plant, under construction since January 2025, is expected to verify this integrated process by autumn 2026. In plain terms, LKAB is trying to turn a century of leftovers into two things Europe badly needs. The laboratory work says it can be done; the next test is whether it can be done reliably at industrial scale.

A Piece of the Puzzle, Not the Whole Picture

LKAB's plans are sizeable. The company has EU strategic project status under the Critical Raw Materials Act for three linked projects across northern Sweden, a designation meant to speed up projects considered essential to Europe's supply security. Its Per Geijer deposit near Kiruna contains an estimated 2.2 million tonnes of rare earth oxides, Europe's largest confirmed resource.

Among the 17 rare earth elements, two matter most for permanent magnets: neodymium and praseodymium. They create the strong magnetic fields that allow EV motors to be compact and wind turbines to run efficiently. LKAB has not published official volume forecasts for these magnet-grade elements, though it says it wants to cover a substantial part of the EU's target to extract at least 10% of its rare earth needs domestically.

Full-scale production is aimed at the 2030s. The investment decision has not yet been taken. LKAB's chief operating officer has said the company will proceed "step by step" and commit capital only "when conditions are right".

The Bottleneck Is Downstream

Europe's harder problem is not only getting material out of the ground. It is the separation and refining capacity needed to turn mixed concentrate into industrial-grade inputs. Rare earth elements are chemically very similar, rather like trying to separate 17 shades of off-white paint. Sorting them requires hundreds of chemical stages through a process known as solvent extraction. China has spent four decades improving that system and now operates 85–90% of global separation capacity. Europe's only large-scale facility, Silmet in Estonia, handles about 3,000 tonnes a year.

France announced a €600 million national resilience plan on May 5 to rebuild this downstream capacity. On paper, the French and Swedish efforts fit together: Sweden produces the concentrate, France refines it into usable metals. The difficulty is timing. French separation targets first production around 2028, while LKAB's concentrate is not expected in volume until the early 2030s. For the rest of this decade, French refineries will need feedstock from outside Europe.

A Nordic supply route is beginning to take shape in the gaps: Swedish extraction, Norwegian separation and Finnish processing technology. Three countries have complementary roles, but no formal coordination agreement yet. The market is piecing together what governments have not organised.

What to Watch

LKAB's demonstration plant this autumn will answer the first practical question: can the extraction process work outside the lab, and can emissions remain within the permit limits? That answer will shape the full investment decision.

The wider test comes in October 2026, when China's temporary suspension of rare earth export restrictions expires. Europe's first new separation capacity is not expected until early 2027. That gap will show how exposed the continent still is, and how quickly its scattered rare earth projects need to become a working supply chain.