By Eric Onstad

LONDON, May 29 (Reuters) - Britain's Less Common Metals, one of the few firms outside China involved in a key step of rare earths processing, plans to build a plant in France, teaming up with a recycling firm there, LCM's majority owner and chairman said.

The move would mark another step to diversify Western supplies of rare earths - critical for making magnets used in electric vehicles, wind turbines and electronic components.

China accounts for about 90% of the world's processed rare earth production.

LCM aims to launch production of rare earth metals and alloys in France by 2027, using raw materials from a plant being built by Carester, Grant Smith told Reuters.

France, aiming to become a European hub for the rare earths sector, is also home to a rare earths plant owned by chemicals group Solvay SOLB.BR, which launched an expansion in April.

A final decision is due soon on LCM's 110 million euro ($124 million) project that would be built in Lacq, southwestern France, adjacent to Carester's plant, which will take old permanent magnets and recycle them, Smith added.

"To put the finishing touches on our project, we need two things: get the funding in place and finalise the offtake to make sure the project's going to be viable," Smith said in an interview.

Carester has received 216 million euros in funding from Japanese sources and the French government for its processing unit Caremag, which is expected to produce 1,400 metric tons of rare earth oxides a year, mainly from recycled magnets.

LCM aims to apply for funds from both the European Union and France and also plans to raise equity or debt funding, Smith said.

LCM would take the rare earth oxides from Caremag and process them into rare earth metals and alloys, which would be sold to permanent magnet producers.

Rare earths go through a lengthy and complex process to be transformed from mined ore to finished permanent magnets and only a handful of companies outside of China are involved in the metals and alloying segment.

Since 1992, LCM has produced a range of rare earth metals and alloys at its plant at Ellesmere Port in northwest England and it will continue that production as it expands abroad, Smith said.

In the longer term, LCM is also considering establishing operations in North America and Asia, he added.

($1 = 0.8862 euros)

(Reporting by Eric OnstadEditing by Mark Potter)

((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO; Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))