San Marcos-based company, Noveon Magnetics Inc., has secured $75 million in funding to ramp up production of rare earth magnets, in high demand from government and private sector buyers. Noveon announced that the series B funding round was spearheaded by investment firms NPG in Dallas and Aventurine Partners, with their primary office located in Houston. These firms specialize in supporting businesses in the clean energy sector.
This investment serves as another financial boost for Noveon, as their clients and potential customers actively seek out permanent magnets made from rare earth materials such as neodymium. These magnets find applications in various industries, including computer and microwave cooling fans, MRI machines, electric vehicles, wind turbines, fighter jets, and missiles. They play a crucial role in motors and generators, facilitating the conversion of electricity into motion and vice versa.
In a recent statement, Noveon CEO Scott Dunn emphasized the commitment of the company’s team to meet the growing demand for rare-earth magnets, essential for driving a low-carbon future, while simultaneously reinforcing the domestic supply chain to align with national security priorities. The recently secured funding will enable Noveon to continue expanding production capacity, catering to their robust sales pipeline and addressing the surging global demand for critical rare-earth magnets.
As part of their expansion plans, Noveon intends to augment their workforce from approximately 65 employees to 100 within the current year. In 2020, the company had a staff of 25. With the additional workforce, Noveon aims to achieve an annual production target of 10,000 tons within a span of five to seven years. Currently, the global production of such magnets stands at approximately 170,000 tons per year.
Scaling Production for Growth
In order to achieve its production targets, Noveon has been conducting extensive searches across Texas, the United States, and international locations to identify suitable sites for constructing additional manufacturing plants. CEO Dunn has expressed the company’s strategic interest in expanding into Europe.
Noveon, established in 2014, is still in its early production stages at its San Marcos facility. Construction of the facility began in 2018, and rare earth material recycling and magnet production commenced in 2020. The company faced challenges related to the supply chain during the COVID-19 pandemic and dedicated months to equipment installation and testing its recycling process in the previous year. Forbes recently reported that Noveon’s projected revenue for this year is around $10 million.
However, Noveon, formerly known as Urban Mining Co., has successfully raised approximately $150 million in equity funding, including the recent funding round, from investment firms and the Defense Department in recent years. The company aims to achieve a target of manufacturing approximately 2,000 tons of magnets annually by next year, according to a company spokesperson. Furthermore, the San Marcos facility is expected to generate an estimated revenue of $250 million. NGP partner James Wallis, who recently joined Noveon’s board of directors, expressed confidence in the company’s ability to sustainably manufacture high-quality rare-earth magnets. These magnets play a crucial role in a wide range of industries, particularly those focused on the efficient utilization and generation of electricity.
Responding to a request
Noveon’s proprietary recycling initiatives have gained significant endorsement from politicians, as well as government and private sector clients, who emphasize the significance of seeking alternatives to China’s longstanding control over the mining and manufacturing of rare earth elements.
In February, Governor Greg Abbott delivered his 2023 State of the State Address from Noveon’s expansive 145,000-square-foot facility located in San Marcos, approximately 35 miles south of the Texas Capitol in Austin.
During the address, Governor Abbott underscored the predominant reliance on China for the majority of rare earth materials, emphasizing the vulnerability associated with such dependency. He highlighted the potential repercussions if the supply from China were to ever face disruptions, stating that many daily activities would be severely impacted. Governor Abbott expressed the imperative for Texas and the United States to reduce dependence on China, advocating for innovative solutions like Noveon to foster self-reliance, bolster local manufacturing, and secure a resilient future for Texas.
In 2018, the Trump administration initiated an ambitious plan to enhance domestic capacity and relocate supply chain operations to the United States. Similarly, in March 2022, the Biden administration invoked the Defense Production Act to stimulate domestic production of raw materials and reduce the nation’s reliance on foreign supply chains.
The Biden administration is actively exploring avenues to augment domestic production of neodymium magnets, commonly referred to as “the strongest magnets on Earth.” A report from the U.S. Department of Commerce highlights that China currently produces 75 percent of American sintered neodymium magnets, and it recommends taking measures to bolster domestic production.
Recognizing this need, the Defense Department has granted Noveon $35 million in funding over recent years. Additionally, Noveon has expressed its pursuit of funding opportunities from the U.S. Department of Energy, aligning with the government’s efforts to strengthen domestic production capabilities.
Specialized market segment
In the shadow of China, a handful of magnet factories remain operational in the United States. One such factory is MP Materials, a privately held company based in Nevada, which possesses a rare-earth mining and processing facility in Mountain Pass, California. In a bid to support the production of electric motors, MP Materials intends to construct a magnet factory in Forth Worth with the capacity to manufacture approximately 1,000 tons of neodymium magnets annually. The company has already secured an agreement with General Motors Co., a leading automaker that is actively engaged in electric vehicle development.
In the small yet competitive market, Noveon occupies a unique niche. This company utilizes its patented technology to recycle rare earth materials through a powder metallurgical process, enabling the production of sintered magnets. Notably, Noveon is the sole domestic enterprise employing the sintering process.
Noveon acquires materials from various partners, including Bird, an electric scooter company based in Florida, for the purpose of recycling rare earth minerals and old magnets obtained from electric motors found in personal mobility devices, automation devices, robotics, wind turbines, electric vehicles, and hard disk drives from data centers. Additionally, the company has the capability to obtain pure materials from domestic and international allied partners in order to manufacture magnets of superior quality.
According to reports, Noveon has amassed a customer base of over 100 clients operating in industries such as defense, automotive, and energy, among others. A spokesperson for the company recently revealed that they supply magnets to Nidec Motor, an electric motor manufacturer in Japan, as well as Eriez, a privately held company specializing in the design and production of industrial equipment located in Erie, Pennsylvania.
