LONDON, June 27 (Reuters) - EU companies are gearing up

to take advantage of the huge potential for recycling to supply

critical rare earths for the bloc's green transition, but it

will take time before there is enough supply of old EVs and wind

turbines to process.

The EU will struggle to meet ambitious goals for rare earths

in new legislation designed to boost domestic output of critical

minerals and reduce dependence on China.

Under the Critical Raw Materials Act that entered into force

last month, the bloc has set a target that recycling should meet

25% of EU demand for critical minerals by 2030, including rare

earths.

Today, less than 1% of rare earths consumed in the EU are

recycled.

The 25% target is not due to be met according to a Reuters

analysis, but in the longer term, the outlook is strong for the

bloc to furnish a large portion of the rare earths needed for

electric vehicles and wind turbines from salvaging and

re-processing them.

"Today you have magnets that are leaving Europe every day

because there is no possibility to recycle them here," said

Frédéric Carencotte, the founder of French start-up Carester.

The company is already collecting old magnets to be ready

when its plant is due to go into production in 2026.

Initially, it plans to process 2,000 tons a year of old

permanent magnets and produce rare earth oxides.

At first it will also process concentrate from mines until

enough old EVs and wind turbines are scrapped to boost supply of

old magnets.

Another key input will be so-called "swarfs", leftovers when

blocks of new permanent magnets are cut into specific shapes,

which can total up to a fifth of magnet production.

Germany's privately-held Heraeus Remloy launched a plant

last month to recycle old electronic devices into a magnetic

alloy powder that can be used to produce permanent magnets.

The output from Carester would meet about 6% the EU's rare

earth oxides demand by 2030, Heraeus would meet about 1% of

demand for rare earth metals and alloys while two other projects

would satisfy 4% of magnet demand, the Reuters analysis found.

It is not viable to recycle every magnet, because by 2030

the EU will have about 1.1 billion end-of-life devices

containing magnets, each of which only contain about 30 grams of

magnets on average, said Ryan Castilloux at consultancy Adamas

Intelligence.

The EU should focus on mandating the recycling of magnets

from EVs and wind turbines, which will comprise the bulk of

magnets coming to end-of-life in the future, he added.

"Extended producer responsibility is seen as a key solution,

but challenges like high recycling costs and inadequate

collection systems exist," said Bernd Schaefer, CEO of EIT

RawMaterials, an EU-funded group leading a sector alliance.

HyProMag in Germany and MagREEsource in France also aim to

recycle magnets, but plan to use a so-called "short-loop"

technology to re-manufacture them into new magnets.

MagREEsource, a spin-off from France's CNRS scientific

research institute, is due to open a plant this month while

HyProMag aims to launch production in mid-2025.

France's state-owned nuclear fuel specialist Orano leads the

Magnolia Project, which seeks to recycle and manufacture

permanent magnets for EVs with 25% recycled content. It plans to

launch a pilot plant this year.