HONG KONG (NYTIMES) - One of the world's last processors of rare earth metals outside China is buying mining rights in Greenland to reduce dependence on Russian ore and stabilise prices, in the latest move by Western companies to diversify supply chains after Russia's invasion of Ukraine.

Rare earth metals are essential for the manufacture of a broad range of modern products, including electric car motors, offshore wind turbines and smart bombs. Demand has soared as carmakers switch more of their production to electric vehicles.

Dozens of mostly small companies mine rare earth ore around the world and do some initial processing to remove dirt. But only two commercial-scale factories outside China perform the difficult task of chemically separating semi-processed ore into usable material for magnets in electric car motors and other applications.

Toronto-based Neo Performance Materials buys semi-processed ore from Russia, the United States and Australia and does the chemical processes at factories in Estonia and China.

Another company, Lynas, mines rare earth metals ore in Australia and does the chemical processes in Malaysia.

Neo said on Monday (Aug 22) that it was acquiring rare earth mining rights in Greenland from Hudson Resources, a tiny mining company based in Vancouver, British Columbia. The acquisition is the first move into rare earth mining by Neo, whose Magnequench division is the corporate descendant of a former General Motors subsidiary that pioneered many modern magnetic applications of rare earth metals in the 1980s.

GM saw little potential then in electric cars and disposed of the operation in 1996.

Mr Constantine Karayannopoulos, chief executive of Neo, said his company planned to start mining and processing ore in Greenland in two to three years, with full production in about five years. The semi-processed ore will be shipped to Neo's chemical separation factory in Estonia, a former Soviet republic on the Baltic Sea in Eastern Europe.

Neo's goal is to free itself of the need to buy ore at world prices. These prices fluctuate more widely than most commodities, surging up to 10-fold during periods of geopolitical tensions before crashing once tensions ease.

"I want the flexibility to feed 100 per cent of my own production, or 50 per cent my own and buying in the market," Mr Karayannopoulos said.

Having a reliable, in-house source of raw material will make it possible to sell rare earths at fixed prices on long-term contracts with carmakers, making the deployment of electric cars easier and more financially predictable, he added.

Neo is also preparing to start building this winter a factory in Estonia that will turn processed rare earths into magnets for electric car motors.

With European carmakers shifting production quickly towards electric cars, the European Union is offering financial assistance for the creation of a mines-to-magnets supply chain within Europe for rare earths.

Although Greenland is geographically part of North America, it is an autonomous district of Denmark, a member of the EU.

The factory in Estonia currently buys three-fifths of its rare earth ore from Russia and the rest from Utah. The West has imposed many sanctions and other restrictions on companies and exports from Russia, but not yet on rare earth metals.

Neo is not the first company to try to mine rare earths in Greenland. A consortium including a Chinese state-owned enterprise tried to open a mine at the southern tip of Greenland several years ago, at a rare earths deposit that also holds considerable uranium. That project was blocked by local opponents and regulators worried about the risk of radioactive contamination of the environment.

Mr Don Hains, a Canadian geologist who has advised Hudson Resources in Greenland and will now become a consultant to Neo, said the deposit in Sarfartoq being acquired by Neo had 97 per cent less radioactive material per tonne than the deposit at the southern tip of Greenland.

Radiation levels at Sarfartoq are "less than what you would find sitting on granite boulders beside the ocean in Maine", he said.

The Sarfartoq deposit, on Greenland's western coast, is also considerably smaller than the one at the southern tip of Greenland. But Mr Karayannopoulos said the Sarfartoq deposit still had enough rare earths to meet Neo's entire worldwide processing needs for at least 30 years, and possibly for a century if further drilling at the edge of the deposit confirms further rare earth ore.

Ocean currents along the west coast of Greenland keep it free of ice through the winter, making it easier to ship semi-processed ore to Estonia, Mr Hains said.

Rare earths, a group of 17 elements near the bottom of the periodic table, are not radioactive, but radioactive contaminants such as uranium and thorium occur naturally in rare earth deposits.

Controversies over how to dispose of those contaminants have led to the shuttering of rare earth separation factories over the past 40 years in Japan, Australia, France and the US.

That has left China as the world's main miner and separator of rare earths. Russia is the fourth-largest miner of rare earth metals.

The US and Australia are roughly tied for a distant second in mining. Almost all of the US ore is mined in California and goes to China for processing, although a little is produced in Florida and processed in Utah.

President Joe Biden and Governor Gavin Newsom of California announced plans in February to subsidise the restarting of chemical separation in California.

Rare earth metals have been a highly visible industry ever since China halted exports to Japan for two months in late 2010 during a territorial dispute.

Rare earths are essential but mostly used in trace amounts, so the actual value of the industry is small. Industry analysts put the worldwide value of rare earth ore sales at about US$2 billion (S$2.8 billion), and the value of completely processed magnetic powders and other rare earth materials at nearly US$8 billion.