160 to 1: The Rare Earth Magnet Gap Hiding in Plain Sight

Why the gap keeps growing

Demand is not standing still. Every electric vehicle, every artificial intelligence (AI) data center, every industrial robot and every heat pump installed adds to US magnet consumption. Analysis from Foreign Policy in Focus suggest that the roughly 20,000 metric tons per year of US magnet capacity slated for 2028 would cover only about half of the current consumption, while demand is projected to climb past 50,000 metric tons by 2030.

The International Energy Agency estimates that, even after all announced projects, magnet output outside China would meet well below 20 percent of demand outside China in 2035.

China also accounted for about 71 percent of US imports of rare earth compounds and metals over 2021 to 2024, according to the US Geological Survey. That leaves US manufacturers exposed to a single supplier’s policy decisions and operational stability. One change in export policy or one environmental hiccup can ripple through every product line that uses a motor.

Projects are stepping up, but not fast enough

MP Materials (NYSE:MP) has commenced magnet production at its Texas facility, with an expected output of about 1,000 metric tons per year of finished NdFeB magnets as it ramps up. USA Rare Earth (NASDAQ:USAR) has also broken ground on a South Carolina plant, which it says will produce 6,400 metric tons annually.

Private company Noveon Magnetics is ramping up capacity toward 2,000 metric tons per annum at its 150,000 square foot facility located in San Marcos, Texas.

Add it up, and the 2028 buildout still leaves roughly half of today’s consumption uncovered, before any demand growth. Every new mine-to-magnet plant also needs mined and separated rare earths as feedstock, and most of that still comes from China.

The urban mine

There is another source of supply already inside the country. According to Chatham House, the US generated around 7.2 million metric tons of e-waste in 2022, and the neodymium magnets embedded in that stream likely amount to roughly 18,000 metric tons a year, more than a third of everything the country consumed in 2025. Most of it goes to landfill, because conventional recycling was never built to recover magnets.

“Despite their capability for reuse, rare earth-containing products are used just once and discarded,” Stanford Magnets noted. Conventional rare earth recycling means shredding equipment into powder, heating it to very high temperatures or dissolving it in strong acids and solvents before the rare earths can be separated and the whole mine-to-magnet chain repeated. These routes are energy intensive, chemically intensive and slow.

CoTec Holdings and HyProMag USA

CoTec Holdings fits into the US rare earths supply story through HyProMag USA, its 50/50 rare earth magnet recycling and manufacturing joint venture with HyProMag. HyProMag USA uses patented Hydrogen Processing of Magnet Scrap (HPMS) technology, which uses hydrogen to liberate and demagnetize NdFeB magnets embedded in scrap and redundant equipment, producing an alloy powder that goes straight back into new magnets. This short loop skips the mining, separation and metal-making steps entirely, and no chemical processing is required.

The technology was developed over 15 years at the University of Birmingham and is backed by over US$100 million of research and development investment. Compared with conventional methods, HPMS uses 88 percent less energy and cuts carbon emissions by 85 percent. Recycling and manufacturing will be performed at HyProMag USA’s central hub in the Dallas-Fort Worth region.

Power has been secured and permitting is underway ahead of targeted commissioning of cutting and finishing operations in the first half of 2027, followed by Phase 1 integrated recycling and magnet production targeted for mid-2028 at approximately 550 metric tons per year of NdFeB magnet blocks and finished magnets. Upon completion of Phase 2, magnet production at the hub is expected to reach approximately 1,048 metric tons per year.

The Texas hub is designed as the first of several. An independent prefeasibility study published in October 2026 evaluated three additional plants in South Carolina, Nevada and a second Texas location, together with a central finishing hub, a platform that would lift HyProMag USA’s capacity roughly fourfold to approximately 4,192 metric tons per year of magnets by 2034. The study indicates an incremental post-tax net present value (NPV) of US$1.85 billion to US$2.06 billion for the three new plants and a combined post-tax NPV of US$2.6 billion to US$2.8 billion including the Texas hub, with an sector low all-in sustaining cost of roughly US$37 to US$42 per kilogram of finished magnets against a forecast selling price of about US$100 per kilogram in 2030.

Investor takeaway

The US supply gap will not close instantly. New mine-to-magnet plants will take years to scale, and they still need rare earths feedstock that mostly comes from China today. Recycling is emerging as a faster, more energy-efficient route to usable, additional supply, and the feedstock is already in the country, sitting in scrapped motors, drives and devices.

Investors following this story may find want to watch CoTec Holdings’ HyProMag USA, which is positioned to turn that domestic scrap into finished US-made magnets through its proprietary technology and Texas hub, with a studied pathway to a four-plant platform by the mid 2030s. The company offers a look at how a long-term, sustainable domestic loop can start: by turning yesterday’s equipment into tomorrow’s magnets.

This INNspired article is sponsored by CoTec Holdings (TSXV:CTH,OTCQX:CTHCF). This INNspired article provides information which was sourced by the Investing News Network (INN) and approved by CoTec Holdings in order to help investors learn more about the company. CoTec Holdings is a client of INN. The company’s campaign fees pay for INN to create and update this INNspired article.

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