Mkango's Texas Gambit: A Critical Step Toward US Rare Earth Independence?

The race to secure North America’s rare earth supply chain just took a major turn. Mkango Resources and its partner CoTec Holdings have announced the appointment of PegasusTSI and BBA USA as lead engineers for the HyProMag USA magnet recycling and manufacturing project in Texas. This isn’t just another corporate milestone—it’s a bold play to reshape the continent’s reliance on foreign magnets, which are indispensable for EVs, wind turbines, and defense systems. Let’s dissect the numbers, risks, and implications.

The Engineering Powerhouse Behind the Project

The Texas facility will be built by a U.S.-Canada engineering duo: PegasusTSI (specializing in advanced manufacturing) and BBA USA (a materials engineering firm with decades of experience). Their collaboration is no accident. The project’s core technology—HyProMag’s Hydrogen Processing of Magnet Scrap (HPMS)—requires precision. HPMS, developed with $100M in public research funding, promises to recycle magnets far more efficiently than chemical methods, recovering rare earths from scrap without hazardous byproducts.

The Feasibility Study completed in November 2024 laid the groundwork. Under current market prices, the project’s NPV is $262M; under forecast prices, that jumps to $503M. These figures hinge on a 24-month timeline: detailed engineering wraps by mid-2025, followed by an NTP by year-end, with first revenue expected in early 2027.

The Numbers That Matter for Investors

• Capacity & Scale: The DFW Hub aims to produce 750 metric tons of recycled magnets annually, plus 807 metric tons of co-products. Within five years of operation, this output could supply 10% of U.S. domestic NdFeB magnet demand.
• Environmental Edge: The facility’s carbon footprint of 2.35 kg CO₂ eq. per kilogram of magnet product is a fraction of rivals. This green credential could attract ESG-focused investors and qualify for federal grants.
• Job Creation: 90–100 skilled jobs in magnet manufacturing—a revival for a sector hollowed out by Chinese dominance since the 1990s.

The Strategic Play for Supply Chain Security

The project isn’t just about economics. It’s a geopolitical move. The U.S. currently imports over 80% of its rare earth magnets from China, a vulnerability highlighted in the 2022 CHIPS Act and the Minerals Security Partnership. HyProMag USA’s “Long Loop” recycling concept—recovering rare earths from raw materials, not just scrap—could further reduce reliance on foreign supply chains.

Ownership structure is also telling. Mkango owns 79.4% of Maginito, which in turn holds 80% of HyProMag USA. This gives Mkango significant control while sharing risks with CoTec. The partnership also aligns with U.S. policy: the Minerals Security Partnership is already on board, and local/state/federal permits are in active negotiation.

Risks: The Elephant in the Scrapyard

• Financing: While the Feasibility Study is done, the $262M–$503M NPV assumes steady demand and pricing. If rare earth prices dip (as they’ve done historically), the project’s economics could sour.
• Regulatory Hurdles: Environmental permitting is managed by Weston Solutions, but delays are common in U.S. infrastructure projects.
• Technological Execution: HPMS is proven in labs, but scaling to commercial production is untested.

Conclusion: A High-Reward, High-Risk Pivot

Mkango’s Texas project is a bet on two trends: the electrification boom and U.S. industrial policy. With an NPV of $503M under bullish assumptions and a 40-year operational lifespan, success could position Mkango as a cornerstone of North America’s rare earth infrastructure. The carbon footprint of 2.35 kg CO₂ eq.—far below the industry average—adds ESG credibility, which is increasingly critical for funding.

However, investors must weigh the risks. A 10% U.S. market share in five years is aggressive, and execution is everything. If the facility comes online on schedule, Mkango’s stock (TSX-V:MKA) could see a surge. But a delay or price collapse could reverse momentum.

The bigger picture: this project isn’t just about magnets. It’s a test case for whether the U.S. can rebuild strategic industries without repeating the mistakes of the past. For Mkango, the gamble could redefine its legacy—or become a cautionary tale.

Stay tuned.