LS Eco Energy, Lynas exchange W30b convertible bonds in rare earth tie-up

LS Eco Energy said Monday it has signed an agreement with Lynas to mutually acquire convertible bonds worth 30 billion won ($20.4 million) each. The deal follows a rare earth business cooperation agreement the two companies signed in March.

Lynas is the world's second-largest supplier of rare earth raw materials and in effect the only company outside China capable of large-scale commercial production of rare earth feedstock. Through the partnership, LS Eco Energy said it has secured a stable supply of raw materials — a core competitive asset in the rare earth business.

China's recent export controls on rare earths have made supply chain diversification a top priority for national security and industrial competitiveness, particularly in the United States and Europe. Demand for non-Chinese rare earths is also growing rapidly, with buyers willing to pay a premium to ensure stable supply.

LS Eco Energy is the first company outside China to produce samarium (Sm) metal for defense applications. Samarium is a key material in samarium-cobalt permanent magnets used in fighter jets, missiles and radar systems. The partnership will establish a non-Chinese rare earth value chain running from Lynas's raw material supply through LS Eco Energy's metal production to LS Cable & System's permanent magnet manufacturing.

"This investment is a strategic decision that demonstrates the strong commitment of both Lynas and LS Eco Energy to grow the rare earth business together," said Lee Sang-ho, chief executive of LS Eco Energy. "We will lead the global market on the back of a stable raw material supply chain."

LS Eco Energy plans to expand from defense-use rare earth metals — including those for aerospace and missile applications — into metals for robots and electric vehicles next year. Total annual production capacity currently in the pipeline stands at 2,500 tons.