HyProMag USA: A Strategic Bet on Rare Earth Recycling and U.S. Supply Chain Independence

The U.S. critical minerals landscape is undergoing a pivotal shift. CoTec Holdings Corp. and Mkango Resources Ltd. have taken a decisive step toward securing domestic supply chains by appointing engineering firms PegasusTSI Inc. and BBA USA Inc. to advance HyProMag USA’s rare earth magnet recycling and manufacturing project. Located in Texas’ Dallas-Fort Worth (DFW) Hub, this initiative aims to produce 750 metric tons of recycled sintered NdFeB magnets annually by 2027—a milestone that could reduce reliance on foreign suppliers and bolster national security.

A Project Anchored in Strategic Necessity

The U.S. has long grappled with its dependence on China for rare earth magnets, a cornerstone material for electric vehicles, wind turbines, and defense systems. HyProMag USA’s EPCM contract, following a successful Feasibility Study in late 2024, positions the project to fill this gap. The study highlighted robust financials: a post-tax NPV of $262 million at current prices and $503 million at forecast prices, with a payback period as short as 3.1 years under favorable market conditions.

The project’s 24-month timeline hinges on securing a Notice to Proceed by mid-2025, after which construction will begin. By mid-2027, the facility is expected to generate its first revenue, targeting 10% of U.S. domestic NdFeB magnet demand within five years. This modular design allows for future scalability, aligning with anticipated growth in EV and renewable energy markets.

Technology and Environmental Stewardship

HyProMag USA’s success rests on its Hydrogen Processing of Magnet Scrap (HPMS) technology, developed at the University of Birmingham. This process recycles end-of-life magnets into reusable alloy powder, achieving a low carbon footprint of 2.35 kg CO₂ eq. per kg of product—a critical advantage in an era of stringent emissions regulations. The ISO-compliant environmental study underscores the project’s ESG credentials, likely appealing to investors prioritizing sustainability.

The technology’s efficiency also reduces waste, enabling the facility to produce not just magnets but also 807 metric tons of NdFeB co-products annually, including neodymium and praseodymium oxides. This dual revenue stream strengthens the project’s financial resilience.

Ownership and Geopolitical Alignment

The venture’s 50:50 ownership structure between CoTec and HyProMag Limited (a Mkango subsidiary) reflects a strategic partnership to share risks and expertise. The project also aligns with U.S. government priorities, such as the Minerals Security Partnership, which aims to secure domestic supply chains for critical minerals. Federal and state support—including potential funding discussions and permitting assistance from Weston Solutions—further de-risks the project.

Economic Impact and Investment Case

With an upfront capital cost of $125 million, HyProMag USA will create 90–100 skilled jobs in Texas, revitalizing domestic magnet manufacturing. The project’s swift payback period (3.1 years at forecast prices) and modular scalability position it as a high-return, low-risk opportunity. For investors, Mkango—a key stakeholder—offers exposure to this growth through its stock, while CoTec’s role may hint at future partnerships or spin-offs.

Risks and Considerations

The project is not without challenges. Permitting delays or shifts in rare earth prices could impact timelines and returns. However, the Feasibility Study’s conservative financials—using current prices rather than optimistic forecasts—suggest a prudent risk assessment.

Conclusion: A Foundation for U.S. Critical Minerals Autonomy

HyProMag USA represents more than a manufacturing facility—it is a linchpin in the U.S. strategy to secure its technological and energy future. With a $503 million NPV under forecast prices, a low-carbon footprint, and direct alignment with federal priorities, this project is a compelling investment. For stakeholders in critical minerals, EVs, and defense supply chains, HyProMag USA’s potential to deliver domestic magnet production at scale makes it a transformative opportunity. As the U.S. races to reduce foreign reliance, this initiative could set a template for other critical mineral projects, proving that strategic investments in recycling and innovation are key to long-term resilience.