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Noveon Magnetics Inc.'s processing facility in San Marcos contains high-end industrial equipment. The company recycles rare earth minerals from used electronics to produce magnets used in many high-tech products.

Noveon Magnetics Inc. recycles rare earth minerals from used electronics at its processing facility in San Marcos to produce magnets used in many high-tech products.

Employees work at Noveon Magnetics Inc.'s processing facility in San Marcos. The company recycles rare earth minerals from used electronics to produce magnets used in many high-tech products.

Noveon Magnetics Inc. recycles rare earth minerals from used electronics at its processing facility in San Marcos to produce magnets used in many high-tech products.

Noveon Magnetics Inc., whose office in San Marcos is pictured, produces rare earth magnets. It began construction of the facility in 2018.

Noveon Magnetics Inc., a San Marcos company that recycles rare earth magnets, has raised $75 million in funding as it plans to increase production of the magnets increasingly sought by government and private sector buyers.

Noveon said the series B funding round was led by investment firms NPG in Dallas and Aventurine Partners, which has its primary office in Houston. Both firms work with businesses involved in clean energy.

The investment is another financial boost for the company whose clients and prospective clients are looking for sources of permanent magnets, made with rare earth materials like neodymium, for applications including motors for computer and microwave cooling fans, MRI machines, electric vehicles, wind turbines, fighter jets and missiles. The magnets are used in motors and generators to help convert electricity into motion and vice versa.

RELATED: San Marcos company aims to energize U.S. magnets supply

"Our team is working hard every day to produce the rare-earth magnets needed to power a low-carbon future while strengthening our domestic supply chain in accordance with our national security priorities," Noveon CEO Scott Dunn said in a statement last week. "This funding will allow our company to continue ramping up production to help fulfill our robust sales pipeline and meet the skyrocketing global demand for critical rare-earth magnets."

Plans call for increasing staff from about 65 workers to 100 this year. Noveon had 25 employees in 2020. With the added workers, it seeks to increase production to 10,000 tons annually within five to seven years. Global production of such magnets is roughly 170,000 tons per year.

To meet production goals, the company has been searching across Texas, the U.S. and internationally for sites to build more plants. Dunn has said the company has a "strategic interest" to expand into Europe.

Noveon, founded in 2014, remains in the early stages of production in San Marcos. The company began building its facility in 2018 and started recycling rare earth materials and making magnets in 2020. It struggled through supply chain challenges during the COVID-19 pandemic and spent months installing equipment and testing its recycling process last year. Forbes earlier this month reported that the company expects to bring in just $10 million this year.

Nevertheless, Noveon, formerly known as Urban Mining Co., has raised about $150 million in equity funding — including the recent round — from investment firms and the Defense Department in recent years. The company has set a goal of producing roughly 2,000 tons of magnets annually by next year, a company spokesman said Wednesday, adding that it is set up to generate $250 million in expected revenue at its San Marcos facility.

NGP partner James Wallis, who recently joined Noveon's board of directors, said in a statement that the startup has "a proven capability of sustainably manufacturing superior rare-earth magnets, which are an essential component in a wide variety of industries — especially those focused on the beneficial usage and generation of electricity."

Noveon's patented recycling efforts have garnered support from politicians, government and private sector clients touting the importance of finding alternatives to China's longtime dominance in the mining and production of rare earth elements.

In February, Gov. Greg Abbott delivered his 2023 State of the State Address from Noveon's 145,000-square-foot facility in San Marcos, about 35 miles south of the Texas Capitol in Austin.

"Most rare earth materials now come from China," Abbott said during the address. "If that supply is ever disrupted, many of the things we do every day would come to a halt. The future of Texas and the United States should not depend on China. We must embrace innovation like Noveon to make Texas more self-reliant to create our own products and to secure the Texas of tomorrow."

In 2018, the Trump administration created an ambitious plan to increase domestic capacity and move supply chain operations to the U.S. Similarly, the Biden administration in March 2022 invoked the Defense Production Act to boost domestic production of raw materials to reduce U.S. dependence on foreign supply chains.

The Biden administration is looking for options to increase domestic production of neodymium magnets, which experts have referred to as "the strongest magnets on Earth." A report from the U.S. Department of Commerce shows that China produced 75 percent of American sintered neodymium magnets, and it recommended steps to increase domestic production.

To meet its need, the Defense Department has awarded $35 million in funding to Noveon in recent years. The company has said it's also seeking funding opportunities from the U.S. Department of Energy.

In China's shadow, a few magnet factories remain in the U.S.

MP Materials, a Nevada-based privately held company with a rare-earth mining and processing facility in Mountain Pass, Calif., plans to build a magnet factory in Forth Worth. It aims to produce about 1,000 tons of neodymium magnets per year to power electric motors. It's forged an agreement with General Motors Co., as the giant automaker pushes to develop electric vehicles.

Noveon has a unique niche in the small but competitive market: The company uses its patented technology to recycle rare earth materials through a powder metallurgical process to produce sintered magnets. It's the lone domestic company using the sintering process.

Noveon salvages materials from multiple partners — including the Florida-based Bird, an electric scooter company — to recycle rare earth minerals and old magnets from items such as electric motors from personal mobility devices, automation devices, robotics, wind turbines, electric vehicles and hard disk drives from data centers.

It also can "source virgin/pure materials from domestic and international, allied partners to produce high-quality magnets."

Noveon reportedly has more than 100 customers in the defense, automotive and energy industries, among others. A spokesman this week said the company produces magnets for Nidec Motor, a electric motor manufacturer in Japan; and Eriez, a privately held company that designs and manufactures industrial equipment in Erie, Pa.

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