LS Cable to spend $261m on rare earth magnet plant in Gumi

KRW 350 billion (US$261 million) is the investment behind a new rare earth permanent magnet plant that LS Cable & System plans to build in Gumi, South Korea — a facility designed to pull roughly 17% of the country's magnet demand away from Chinese supply chains.

The company confirmed its Korea Motion Works subsidiary has signed a memorandum of understanding (MoU) with North Gyeongsang provincial authorities and the City of Gumi. LS Cable & System is the electrical and power generation infrastructure unit of South Korea's LS Group. Permanent magnets — the components that make electric motors spin — are essential in EV drivetrains, robots and a range of electrical equipment.

The capacity target is real and specific: over 1,000 tons of magnets per year once the plant ramps. Construction is scheduled to begin in early 2027, according to local reports. Mass production of neodymium-iron-boron (NdFeB) magnets — the workhorse type for EVs and robotics — should start in late 2028. Samarium-cobalt magnets, used mainly in defense equipment, will follow.

Note the distinction here. The MoU is signed, but this remains an announced intention rather than a confirmed, fully contracted plant program. Construction hasn't started. The timeline — two years to groundbreaking, another two to volume output — is aggressive for a segment where South Korea currently leans heavily on China.

Where will the rare earths come from?

The supply chain answer is the most concrete part of the plan. Rare earth materials will be sourced from Australia's Lynas Rare Earths Ltd, the largest non-Chinese producer of separated rare earths. Metals will come from LS Eco Energy in Vietnam, an LS Group affiliate. That routing is the point: it bypasses Chinese material flows entirely.

Korea Motion Works also said it plans to produce permanent magnets in the US. No site, timing or capacity was disclosed for that project, so treat it as an intention, not a program.

Korea Motion Works CEO Hong Young-ho said in a statement: "The support of North Gyeongsang Province and Gumi played a major role in our investment decision. We will develop Gumi into a production hub for rare earth permanent magnets."

The Gumi location is no accident. The city in North Gyeongsang is an established electronics and components manufacturing cluster, with the labor and supplier base a magnet plant needs.

What does this change for South Korea's EV supply chain?

Today, South Korea imports the overwhelming share of its rare earth magnets from China, a dependency exposed when Beijing tightened export controls on gallium, germanium and rare earth processing technology. A 1,000-ton domestic plant covering about 17% of national demand doesn't eliminate that exposure. It builds a hedge — one anchored to Australian mining and Vietnamese metal refining rather than Chinese intermediates.

For Korean OEMs and their tier-one motor suppliers, a domestic NdFeB source from late 2028 offers traceability and logistics advantages, assuming the plant hits its ramp. For magnet buyers outside Korea, it adds another non-Chinese kiloton of capacity to a global pipeline that includes Lynas-backed projects in the US and Japan's existing Proterial and Shin-Etsu output.

What to watch next: the transition from MoU to construction start in early 2027, whether offtake agreements with Korean EV makers or defense agencies follow, and any concrete details on the planned US magnet operation Korea Motion Works has floated without committing to a site.