LS Eco Energy builds Vietnam samarium hub ahead of defense ban

LS Eco Energy confirmed Oct. 6, 2026, that it will inject 11.6 billion won ($8.58 million) into a new Vietnamese venture to refine defense-grade samarium metal outside China.

The cash contribution gives the South Korean cable maker a 58% controlling stake in Global SHRE Metal, a newly incorporated entity in Vietnam. Total initial capital for the joint venture stands at 20 billion won ($14.8 million).

The transaction accounts for 5.14% of LS Eco Energy's equity capital, according to a regulatory filing. The allocation represents 2.36% of the company's total assets of 491.3 billion won ($363.2 million) logged at the end of 2025.

The company will build the reduction facility inside its existing LSCV manufacturing complex in Ho Chi Minh City. LS Eco Energy already operates power cable and communications wire plants at the Vietnamese site.

The Ho Chi Minh City facility will yield roughly 240 metric tons of pure samarium metal each year. That production volume provides sufficient metallic feedstock to manufacture between 700 and 1,000 metric tons of finished samarium-cobalt permanent magnets.

Samarium-cobalt magnets — permanent magnets that preserve magnetic pull under temperatures exceeding 300 degrees Celsius — resist demagnetization far better than standard neodymium alternatives. Neodymium magnets degrade rapidly under elevated heat without heavy dysprosium additives.

Aerospace and defense contractors rely on samarium-cobalt alloys for precision flight guidance actuators, missile steering fins and jet engine sensors. Extreme friction and exhaust heat make thermal stability mandatory in those weapons systems.

Australia's Lynas Rare Earths will supply separated samarium oxide to the Vietnamese plant. Lynas operates the primary commercial rare-earth separation facility outside China, processing mined feedstock extracted from its Mount Weld deposit in Western Australia.

The supply arrangement expands a bilateral financing pact signed in July 2026. Under that agreement, LS Eco Energy and Lynas each purchased 30 billion won ($22.2 million) worth of convertible bonds issued by the other.

External financial investors hold the remaining 42% equity interest in Global SHRE Metal. Lynas holds no direct shares in the Vietnamese operating firm, participating strictly as a commercial feedstock vendor, the company said.

Global SHRE Metal will process rare-earth oxide powders into metallic ingots through thermal reduction. The chemical reduction removes oxygen atoms, converting mineral compounds into metallic elements ready for industrial magnet pressing and sintering.

The venture will ship finished samarium ingots to South Korea to feed permanent magnet manufacturing lines. Parent group company LS Cable & System will absorb the volume for specialized military and industrial motor components.

LS Cable & System established Korea Motion Works in September 2026 to assemble finished permanent magnets. The parent group is disbursing factory capital in tranches through December 2026 to complete Korean production lines.

The investment directly targets a procurement mandate issued by the United States Department of Defense. Beginning Jan. 1, 2027, Pentagon defense acquisition rules ban Chinese rare-earth content in samarium-cobalt magnets used across American military hardware.

The Pentagon restriction extends beyond magnet fabrication to cover upstream mining, chemical separation and metal reduction. Defense suppliers cannot deliver weapon systems containing magnets refined through Chinese supply chains once the prohibition takes effect.

Chinese industrial processors currently control roughly 90% of global rare-earth refining output. Chinese state refiners also control almost all commercial samarium metallization capacity, leaving Western defense primes exposed to export curbs enacted by Beijing in 2025.

LS Eco Energy intends to broaden its Vietnamese production line beyond samarium in subsequent phases. Planned metals include heavy rare earths such as dysprosium and terbium, alongside lighter neodymium-praseodymium compounds, the company said.

LS Eco Energy is scheduled to complete the equity acquisition on Oct. 16, 2026. The company must disburse the cash within 90 days of receiving its initial Vietnamese Enterprise Registration Certificate.

Global SHRE Metal plans to start trial production runs at the Ho Chi Minh City plant in December 2026. Commercial operations will ramp ahead of the January 2027 American defense procurement deadline.

The regulatory filing does not state the total capital expenditure required for full plant commissioning beyond the initial equity capital. The company has also not published binding delivery volume schedules for specific aerospace customers.

Executive Seo Jae-tae will lead Global SHRE Metal as chief executive under the registration filed in Ho Chi Minh City. The Vietnamese authorities will issue final operating licenses following environmental inspections of the reduction furnaces.