LS Eco Advanced Materials CEO Lee Sang-ho, left, poses with Vacuumschmelze CEO Erik Eschen during a memorandum of understanding signing ceremony for the two companies' joint venture at LS Yongsan Tower in Seoul, Wednesday. Courtesy of LS Cable & System

LS Eco Advanced Materials has partnered with German magnet materials producer Vacuumschmelze to establish a joint venture, the electric vehicle (EV) parts supplier said Thursday. The Korean firm is a subsidiary of LS Cable & System.

They plan to produce up to 1,000 tons of neodymium permanent magnets, a key material for EV motors, annually by 2027, an amount that can be used in about 500,000 EVs.

The global demand for the magnets is expected to reach 400,000 tons by 2030 thanks to the EV market's explosive growth.

"LS Eco Energy (LS Cable & System's branch in Vietnam) also plans to supply neodymium this year while reviewing its plan to build a rare earth metal-producing plant in the country," LS Eco Advanced Materials CEO Lee Sang-ho said during a memorandum of understanding signing ceremony for the joint venture at LS Yongsan Tower in Seoul, Wednesday. Lee is also the CEO of LS Eco Energy.

"We aim to build a value chain for rare earth magnet products through our refining technologies in nonferrous metals," Lee said.

LS Eco Advanced Materials was established in 2022 via a split-off from LS Cable & System's copper wire business division. It is a driving motor windings supplier for Hyundai Motor and Kia, accounting for about 70 percent of the domestic market share.

"We are pleased to cooperate with LS Eco Advanced Materials, which has a close relationship with Korean automobile manufacturers," Vacuumschmelze CEO Erik Eschen said. "When the two companies work together, they can create great business opportunities in the Asian market, including Korea."

Founded in 1923 in Hanau, Germany, Vacuumschmelze is Europe's largest permanent magnet supplier with its production bases not only in Germany but also in the United States and Finland.

The German company's plants in the U.S. were built under the partnership with General Motors shortly after the U.S. government started restricting companies from using key materials and parts produced in China.

There are now only about 10 global companies that produce neodymium permanent magnets for EVs, according to an LS Eco Advanced Materials official.