LS Cable will build rare earth magnet plant to bypass China in Gumi

LS Cable & System said Oct. 30 that its subsidiary Korea Motion Works will invest 345.6 billion won ($262 million) to build South Korea's largest rare earth permanent magnet plant.

The manufacturing site in Gumi will produce over 1,000 metric tons of permanent magnets annually upon completion. That volume covers roughly 17% of South Korea's annual domestic magnet demand of 6,000 metric tons.

Korea Motion Works signed an investment memorandum of understanding with North Gyeongsang Province and Gumi City on Oct. 29. The pact covers the construction of specialized production facilities inside the Gumi National Industrial Complex.

The factory will occupy 15,000 square meters of idle land inside an existing LS Cable & System manufacturing campus in Indong. The site already possesses high-voltage electrical substations and industrial water supply lines needed for metallurgical processing.

The capital expenditure will proceed in two separate stages, the provincial government said. Korea Motion Works will allocate 197 billion won to the initial construction phase and 148.56 billion won to the secondary expansion.

The manufacturing project is scheduled to create 212 industrial jobs in Gumi. The first development phase will add 93 manufacturing and metallurgical engineering personnel, followed by 119 operational technicians during phase two.

Initial production lines will manufacture sintered neodymium-iron-boron magnets — high-strength permanent magnets used in traction motors — to supply electric vehicle drivetrains and industrial robotic actuators.

The subsidiary plans to introduce lines for samarium-cobalt magnets in a subsequent stage. These components retain magnetic stability at high temperatures, serving missile guidance systems, military radar modules and aerospace assemblies.

LS Cable & System designed the Gumi investment to anchor an integrated critical minerals corridor operating outside China. Australian producer Lynas Rare Earths will supply refined rare earth concentrates under long-term commercial supply agreements.

LS Eco Energy, a Vietnamese affiliate of LS Cable & System, will convert those raw rare earth oxides into metallic elements. The Hanoi-based subsidiary is investing 11.6 billion won to construct a plant capable of yielding 240 metric tons of samarium metal each year.

Those refined intermediate metals will ship to Korea Motion Works in Gumi for induction melting, jet milling, magnetic alignment and sintering. Finished magnets will go directly into domestic motor assembly lines.

The parent group also intends to feed alloy feedstock from the Gumi facility into a planned permanent magnet plant in the United States. That arrangement aims to qualify finished components for Western defense and automotive content rules.

LS Cable & System established Korea Motion Works as a dedicated subsidiary to consolidate its permanent magnet and motion-control operations. The parent board approved a 150 billion won equity investment on Sept. 29 to acquire 100% of the unit.

The investment directly targets South Korea's heavy reliance on Chinese supply chains for sintered permanent magnets. Domestic automotive and electronics manufacturers currently source more than 90% of their permanent magnets from Chinese refiners.

That single-source exposure became an acute supply vulnerability when China's Ministry of Commerce placed export controls on rare earth extraction and magnet manufacturing equipment in late 2023.

Chinese authorities also require export licensing for specific gallium, germanium, antimony and heavy rare earth products. These controls create administrative delays and cargo bottlenecks for South Korean traction motor producers.

Gumi was selected for the facility because the city serves as a national strategic development cluster for advanced robotics. Proximity to local drive-component manufacturers and automation system integrators provides direct engineering links for Korea Motion Works.

Administrative backing from municipal and provincial authorities played a central role in the location decision, Korea Motion Works Chief Executive Hong Young-ho said. The company plans to develop Gumi into a regional manufacturing base for precision magnetics.

North Gyeongsang Governor Lee Cheol-woo and Gumi Mayor Kim Jang-ho pledged continuous infrastructure and regulatory support during the signing event. Both officials noted that establishing domestic magnet lines shields local industry from international resource nationalism.

Groundbreaking on the Indong plant site is scheduled for the first half of 2027, the company said. Korea Motion Works expects to begin commercial mass production of neodymium magnets in the second half of 2028.

Construction of the entire facility across both phases is scheduled for completion by the end of 2029. The site will scale toward its full 1,000-ton annual output as equipment calibration finishes that year.

The announcement does not state the precise allocation of production volumes between electric vehicle motors and industrial robotics. The participating authorities also did not disclose specific supply contracts with domestic automakers.

South Korea's Ministry of Trade, Industry and Energy maintains neodymium permanent magnets on its list of 185 priority supply-chain items targeted for domestic capacity expansion and import diversification.