The planned rare earths processing plant will alleviate a bottleneck in the supply chain.

MonTREAL — Geomega Resources Inc. has signed a letter of intent to join a consortium of producers supplying Innovation metals Corp. with a rare earth element (REE) for processing into a neodymium concentrate used in high-performance magnetic materials.

The materials are used in a wide variety of electrical machines such as hybrid and electric vehicles, and direct-drive wind turbines.

Geomega, a Saint-Lambert, Que. mining exploration company, said the rare-earth material will come from its Montviel project located in Quebec’s north, to be processed at a separation facility Innovation metals intends to build in Bécancour, Que.

Montviel is one of the largest total rare earth oxide (TREO) resources outside China.

Construction of the $300-million plant, projected to create 300 jobs, could begin by 2014 pending the successful outcome of a feasibility study.

Innovation metals, a Toronto-based company founded last year, is building a consortium of producers to supply the separation facility and alleviate the bottleneck in the rare-earth supply chain created by export restrictions imposed by China. It will focus on REE concentrates rich in critical REEs such as neodymium, europium, terbium, dysprosium and yttrium.

The Quebec government recently notified the company it would not have to undertake an environmental assessment.