HyProMag USA Plans $656M Expansion to Quadruple US Rare Earth Magnet Output

HyProMag USA, a recycler of rare earth magnets, has announced plans to build three new U.S. plants in a major expansion that would roughly quadruple its planned domestic output. An independent pre-feasibility study places the capital cost of the project between $623 million and $656 million.

Expansion Details and Projections

The proposed facilities will be located in South Carolina, Nevada, and a second site in Texas. These plants will feed a central finishing hub situated next to the company's first facility in Northlake, Texas.

Together, the four sites are projected to increase the company's annual output of salable neodymium-iron-boron (NdFeB) magnets to approximately 4,192 metric tons by 2034. This represents a fourfold increase from the 1,048 metric tons planned for the Northlake plant alone. The first phase of the Northlake facility is scheduled for commissioning in mid-2028, with a full feasibility study for the expansion slated for 2027.

Financial Outlook and Funding

The pre-feasibility study, conducted by PegasusTSI and BBA USA, estimates a post-tax net present value for the project of $1.85 billion to $2.06 billion. It also projects a post-tax internal rate of return (IRR) of 31% to 36%.

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Julian Treger, CEO of CoTec Holdings (TSXV: CTH) and a director of HyProMag USA, told Investing.com that the company expects to use a "large project finance component" to fund the capital expenditure. He added that later stages could be partly funded by cash flow from the first plant and that the company continues to evaluate government financing programs. HyProMag USA previously received a letter of interest from the U.S. Export-Import Bank for its first facility.

Market Context

This expansion marks a significant effort to build a domestic supply chain for rare earth magnets, which are critical for electric vehicles, wind turbines, and defense applications. While no firm offtake agreements have been signed, Treger confirmed the company is in "active discussions with several off-takers and prospective customers" and has received multiple letters of support.

HyProMag USA operates as a 50:50 joint venture between CoTec Holdings and UK-based HyProMag Limited, which is majority-owned by Mkango Magnetic Materials (AIM: MKA).