LKAB Begins Construction of Swedish REE Processing Demo Plant

LKAB

LKAB has initiated construction of a demonstration plant in Lulea, Sweden, to process rare earth elements (REEs) from iron ore mining waste. This effort marks a significant step towards European REE independence.

Demonstration Plant to Validate Extraction Processes

LKAB is investing 800mn kronor ($72.65mn) in the plant, aiming for a 2026 startup at a new Lulea industrial park. The demonstration plant will validate and refine extraction processes for a future full-scale facility. The company plans to produce REEs, phosphorus, and gypsum from its Gallivare iron ore mine by processing apatite concentrate, utilizing current waste streams. Operations will scale up with additional processing over time, targeting full operation in the 2030s. The permit process for LKAB's full operation, including the Gallivare apatite plant, anticipates a decision by late 2025.

Strategic Expansion and European REE Independence

Furthermore, LKAB intends to extract REEs from other mineralizations. Future scale-up decisions hinge on the demonstration plant's results and industrial park environmental permits. LKAB's Per Geijer iron deposit in Kiruna, estimated at 1.7mn t of REEs, stands as one of Europe's largest. Europe currently lacks REE extraction capacity, relying on Chinese imports. REEs are crucial for electric vehicle motors, wind turbines, and various electronic and military applications. LKAB has applied for Strategic Project classification under the EU's Critical Raw Materials Act for its Gallivare iron ore mine, Lulea industrial park, and REE-rich Per Geijer iron ore deposit.

EU CRMA Gives Boost to Mid/Downstream Rare Earth Sector

EU CRMA

Strategic support for rare earth processing marks a key shift in EU supply chain independence efforts.

EU Prioritizes Rare Earth Processing Projects

The European Union has approved five rare earth projects under the Critical Raw Materials Act (CRMA). These projects focus on midstream and downstream activities, including processing and recycling, rather than primary extraction. Selected companies — Caremag, Itelyum Regeneration, MagREEsource, Mkangao Resources, and LKAB — will now gain strategic support.

As a result, projects will benefit from fast-tracked permitting, with deadlines capped at 27 months for extraction and 15 months for processing. This move highlights the EU’s strategy to reduce dependence on China’s dominance in rare earth processing and refining.

China's Export Control Spurs EU Response

China currently controls 80–90% of the rare earth supply chain beyond mining. However, a proposed Chinese regulation could tighten control over imported rare earth ores. The rule, floated in February, would include imported ores in China’s domestic mining quota, effectively limiting tolling arrangements.

Beijing already prohibits toll-only processing under its 1998 law, requiring ownership of imported material. Therefore, new global processing hubs are essential to avoid sending ores to China for refining. European projects receiving CRMA support could become vital alternatives by 2030.

Rare Earth Industry Welcomes Support

The selected projects are expected to be operational by 2030, according to the European Commission. While timelines remain uncertain, the rare earth sector has welcomed the regulatory and permitting support. Industry participants view the move as a significant signal for rare earth supply diversification.

The Metalnomist Commentary

The EU’s CRMA initiative marks a shift from mining dependency to processing sovereignty. Strategic support for downstream rare earth capacity is essential for industrial resilience in the energy transition era. If successfully implemented, these projects could help rebalance the global rare earth supply chain.