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LS Eco Energy's Vietnam production subsidiary (LSCV). / LS Cable & System

LS is accelerating the construction of a rare earth supply chain outside China. The structure sources rare earth raw materials from Australia's Lynas, processes them into metal in Vietnam through LS Eco Energy, and manufactures permanent magnets in Gumi, North Gyeongsang Province through LS Cable & System. With LS Cable & System deciding to inject 150 billion won to build a permanent magnet plant in Gumi, industry observers note that a non-China rare earth value chain linking raw material sourcing, metal processing, and finished product manufacturing is taking concrete shape.

According to industry sources on the 1st, LS Cable & System decided to contribute 150 billion won to Korea Motion Works, a subsidiary handling the manufacture and sale of rare earth permanent magnets. By acquiring 150 million shares of Korea Motion Works established last month, LS Cable & System secures a 100% stake. The capital injection will go toward constructing the rare earth permanent magnet production plant in Gumi, with payments scheduled in installments through December 31.

This investment is significant because it extends the rare earth business LS has been pursuing all the way to the finished product, permanent magnets. LS has been constructing a supply chain connecting Australian rare earth firm Lynas, LS Eco Energy, and LS Cable & System. Under this arrangement, Lynas supplies rare earth raw materials, LS Eco Energy processes them into metal in Vietnam, and LS Cable & System uses them to manufacture permanent magnets.

The raw material at the starting point of the supply chain is secured through collaboration with Lynas. LS Eco Energy and Lynas strengthened their partnership in July by mutually subscribing to 30 billion won worth of convertible bonds (CBs) each. Moving beyond raw material procurement into a capital relationship, the plan is to expand the non-China rare earth business together.

Capital spending is also underway for rare earth metal production, the intermediate step. LS Eco Energy is investing 11.6 billion won in LSCV, its manufacturing subsidiary in Ho Chi Minh City, Vietnam, to set up samarium metal production facilities with an annual capacity of around 240 tons. The company plans to start pilot production this December. This volume can support annual output of roughly 700 to 1,000 tons of samarium-cobalt (SmCo) permanent magnets. Samarium is a core material in SmCo permanent magnets that stably retains magnetism even at high temperatures, used across aerospace and defense sectors. LS Eco Energy plans to expand rare earth metal production in the future to include dysprosium (Dy), terbium (Tb), and neodymium-praseodymium (NdPr). Accordingly, applications for the permanent magnet business could widen to electric vehicles, robotics, and wind power generation.

LS is linking each phase of the rare earth business outside China to diversify a supply chain heavily concentrated there. Rare earth permanent magnets are essential components used in EV traction motors, robotics, wind turbines, and defense equipment. Because China exercises strong influence over the separation, refining, metal processing, and permanent magnet manufacturing of rare earths, securing a non-China supply chain against potential disruptions is considered a pressing challenge.

An LS Cable & System official stated, "The capital contribution to Korea Motion Works is aimed at entering the rare earth permanent magnet business, and the invested funds will be used to construct a permanent magnet manufacturing plant."

                                                                                                            Lee Seo-yeon