Schaeffler typically purchases manufactured components from subcontractors, or so-called Tier 2 suppliers. A sustainability-focused company led it to source raw materials for the first time instead of off-the-shelf magnets , Schick said.
Schaeffler is also working with European partners to use rare earths processed by REEtec to produce permanent magnets.
When asked if Schaeffler was willing to pay a premium for locally produced magnets in a sustainable and transparent manner, Schick said, “From a business perspective, it’s not a walk in the park, it’s a challenge, but it’s our commitment to sustainability. “
He gave no indication of what the costs might be.
As a mature industry with tight margins, the automotive sector is known to be intensely focused on cutting costs, but industry sources said there is growing acceptance among automakers and their suppliers. that they have to pay more for rare earths from Europe.
They may be marketed as more durable, which may justify charging the customer a higher price, according to industry analysts.
Rare earths are not rare, but complex processing, which can generate toxic waste, is required to separate the ore into 17 individual elements and produce the alloys used in a range of electronics as well as electric vehicles.
Private company REEtec uses cleaner technology that requires less energy and in which almost all of the chemicals used in processing are recovered and reused, CEO Sigve Sporstol said. He refused to provide the quantity to be produced.
REEtec has operated a demonstration plant since 2019, and the new agreement will see the company build a commercial separation facility, sourcing raw materials from Vital Metals VML.AX in Canada, which started production last year. last.