In This Article:
(Repeats story filed on April 19 without changes)
* First deal in Europe auto sector to source domestic rare earths
* Europe seeking to cut dependence on China for rare earths
* Five-year deal with Norway's REEtec for rare earth oxides
By Eric Onstad
LONDON, April 19 (Reuters) - German auto parts supplier Schaeffler has signed a raw materials deal to ensure the supply of rare earth magnets from Europe for its burgeoning electric vehicle (EV) motor business, an executive told Reuters.
It is the first reported agreement by a European auto sector supplier or automaker to source rare earths within the region.
The European Union is spearheading a drive to boost domestic production of rare earths and super strong magnets used in EVs and wind turbines to cut dependence on top supplier China.
Schaeffler has agreed a five-year deal with Norway's REEtec to supply rare earth oxides from 2024, said Andreas Schick, Chief Operating Officer of Schaeffler.
He declined to provide the value of the transaction, which is due to be announced on Wednesday.
"We are transforming into an e-motor supplier and are ramping up significantly," he said in an interview.
"Therefore on the rare earth side we need competent partners, not only going through the standard supply chain through China, we need a local supply chain for Europe."
Automakers planning on massive jumps in EV production have agreed contracts in recent years with miners for battery raw materials such as cobalt, lithium and nickel, but such deals have been limited in the rare earths sector.
General Motors Co in December reached an agreement to source rare earth magnets in the United States, but this is the first reported one in Europe.
The European Union, Britain and the United States are scrambling to build domestic rare earth and magnet industries to wean themselves off China, which supplies 98% of permanent magnets to Europe.
Schaeffler - a leader in bearings that it supplies to automakers such as Volkswagen, General Motors and Honda - usually buys manufactured components from subcontractors referred to as Tier 2 suppliers.
The company's focus on sustainability made it source raw materials for the first time instead of ready-made magnets, Schick said.
Schaeffler, Germany's fifth biggest auto supplier by revenue, is also working with European partners to use the rare earths processed by REEtec to produce permanent magnets.
When asked if Schaeffler was prepared to pay a premium for domestically-produced magnets produced in a sustainable and transparent way, Schick said: