LKAB Clears Luleå Rare Earth Hurdle

Every electric car motor, offshore wind turbine generator and precision-guided missile depends on the same hidden component: permanent magnets made with rare earth elements. Europe uses thousands of tonnes of these materials each year and produces none at home. It imports 95% of its rare earths, while China controls roughly 70% of EU supply and up to 90% of global processing. For Malta, this sits behind the visible politics of electric cars, energy transition and defence procurement: a European strategy can still depend on a supply chain outside Europe. On 26 May, a Swedish court granted the environmental permit for a project that could start changing that, slowly.

Treasure in the Tailings

LKAB, Sweden’s state-owned iron ore group, has been cleared to build an industrial park for critical minerals in Luleå, in the country’s far north. The raw material is not a new mine, at least at this stage. It is apatite, a phosphorus-rich mineral that LKAB has treated as mining waste from iron ore production for more than a century. Inside that waste are all 17 rare earth elements, including the ones needed for the magnets that sit inside Europe’s green technology and defence systems.

The process is simple to describe and difficult to industrialise. Ground apatite is dissolved in acid, which releases rare earth ions together with phosphorus and calcium. A sequence of precipitation and filtration then concentrates the rare earths into a mixed compound, 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 mining leftovers into two products Europe badly needs. The chemistry has worked in the lab. The question now is whether it works at industrial volumes without breaching the environmental limits in the permit.

A Piece of the Puzzle, Not the Whole Picture

LKAB’s wider plan is serious. The company has EU strategic project status under the Critical Raw Materials Act for three linked projects in northern Sweden. Its Per Geijer deposit near Kiruna contains an estimated 2.2 million tonnes of rare earth oxides, Europe’s largest confirmed resource. Of the 17 rare earth elements, two matter most for permanent magnets: neodymium and praseodymium. They create the strong magnetic fields that make electric vehicle motors smaller and wind turbines more efficient.

LKAB has not published official production forecasts for those magnet-grade elements. It says the projects should cover a substantial part of the EU target to extract at least 10% of its rare earth needs domestically. That target matters because it is the legal lever Brussels is using: the Critical Raw Materials Act does not create minerals by decree, but it gives selected projects faster permitting and political priority.

Full-scale production is aimed at the 2030s. The final investment decision has not 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 real weakness is not only in mining. It is in the separation and refining capacity needed to turn mixed concentrate into industrial-grade materials. Rare earth elements are chemically very similar to each other, rather like trying to separate 17 almost identical shades of white paint. The standard method, solvent extraction, requires hundreds of consecutive chemical baths. China has spent four decades refining that system and now operates 85–90% of global separation capacity. Europe’s only large-scale facility, Silmet in Estonia, processes about 3,000 tonnes a year.

France announced a €600 million national resilience plan on 5 May to rebuild this downstream capacity. On paper, the French and Swedish plans fit together neatly: Sweden supplies the ore and France refines it into usable metals. The timing is less neat. French separation targets first production around 2028, while LKAB’s concentrate is not expected to arrive in volume before the early 2030s. Until then, French refineries will still need feedstock from outside Europe.

A Nordic corridor is also taking shape: Swedish extraction, Norwegian separation and Finnish processing technology. It is not yet a formal supply chain with binding coordination. It is a set of commercial pieces beginning to align because the market can see the gap faster than governments can close it.

What to Watch

LKAB’s demonstration plant this autumn will answer the first hard question: whether the extraction process can run reliably outside the lab while keeping emissions within the permit limits. That result will shape the full investment decision. For smaller member states like Malta, which will not be hosting rare earth mines or refineries, the issue is still domestic policy. The price and availability of these materials will feed into electric transport, renewable energy infrastructure and the cost of importing the technology needed for the transition.

The next political test comes in October 2026, when China’s temporary suspension of rare earth export restrictions expires. Europe’s first new separation capacity is not due online until early 2027. That short gap will show how exposed the EU still is, and whether its scattered rare earth projects can become a functioning supply chain rather than a collection of national announcements.