Noveon aims to jumpstart rare-earth magnet production in US

February 23, 2023

Noveon Magnetics Inc. is a growing magnet supplier south of Austin in San Marcos.

After two years of what its CEO called "bringing to a life a very big, full-sized manufacturing facility," the United States' only rare-earth magnet company is ready to ramp up manufacturing — and shift to the U.S. part of an industry that is primarily located in China.

San Marcos-based Noveon Magnetics Inc., which rebranded last year from Urban Mining Company, was thrust into the spotlight earlier this month, when Texas Gov. Greg Abbott held his State of the State address at its 150,000-square-foot facility at 1550 Clovis R. Barker Road.

Noveon, which has received more than $35 million in investment from the U.S. Department of Defense, recycles discarded rare earth magnetic material — a category of rare metals that includes promethium and holmium — to produce magnets that are used to power everything from electric vehicle motors to wind turbines and other sustainable applications.

The facility is built to manufacture 2,000 metric tons of magnetic material annually — and aims to eat into projected shortages in magnet supply, while shifting their production away from China, which according to some estimates accounts for about 93% of the industry.

"China has essentially created such a position of dominance, and it's pretty much covered the entire value chain. From the mining side, all day long. From a lot of the in-between stages that create metals and alloys and commodity tradable-type products, all the way into these finished products ... China just completely dominates that," CEO Scott Dunn told the Austin Business Journal in early December. "When chip shortages and Covid came rolling around, anything that was maybe hypothesis, including at the customer level, we kind of looked like fortune tellers or geniuses. It was just kind of right place, right time I suppose."

Abbott's State of the State address kicked off should be a big year for Noveon. The event was not open to the public or the press, cell phones were banned and some attendees were forced to sign non-disclosure agreements, according to the Texas Monthly. During the speech, Abbott pointed to Noveon as an example of the importance of bringing industry back to the United States amid supply chain disruptions and potential national security issues spurred by always-fluctuating global tensions.

"Most rare earth materials now come from China," Abbott said, according to prepared remarks. "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."

Noveon Magnetics Inc. CEO Scott Dunn

The effort to shift rare-earth magnet production to the United States is baked into the fabric of the company, Dunn said. Noveon launched in Austin as a pilot plant lab in a 10,000-square-foot space near Austin-Bergstrom International Airport. But after finding success, it was lured to a 100-acre site in San Marcos in 2020, in part with property tax rebate incentives. The facility was built on only 10 acres, leaving room for potential expansion.

In the two years it's taken to get the facility up and running, Noveon leaders have been raising capital; Dunn said they are gearing up to announce the results of a capital campaign that should top $100 million. While he declined to provide revenue numbers, he said Noveon operated with thin margins for its first few years but is now finally getting into its revenue years.

Noveon has also worked on developing its customer base. Dunn said the company could not divulge specific names but that many come from the defense sector, where U.S. defense contractors are prevented by a recent law from using Chinese magnets. Noveon has also been building its workforce and now employs about 60, with plans to go grow to more than 100 within the next two years.

"We're just really working locally to develop as much of the labor draw and the training and the workforce development as we can. There's a lot of disciplines and skill sets here," he said, pointing to the fact that employees specialize in fields from computer science to floor operations. "It's a really cool mix of job creation. We're obviously a little blue-blooded American about it. We're very excited to develop and on some level actually even bring back to the U.S."

That last component is a point of emphasis for the business. Dunn said that for the past 30 years, China has been monopolize the mining of raw materials. That became an issue during the coronavirus pandemic when supply chains were upended.

"We're the only company that has any manufacturing capability or technology or patents or white papers and especially a recycling capability in this hemisphere," Dunn said.

He said that consolidation and centralization of the entire industry in one country is a big problem. That means that all of the machines and machine builders are located in one country. Dunn hopes to seed some of that supply chain and technical capability here in the U.S.

"We'll be very focused on how we effectively do that and maintain control over cost and quality of our product," he said.

But he said that's one of the reasons Noveon execs are excited to be in San Marcos, which he said has been "great" because of its centralized location and access to talent from nearby colleges. San Marcos can draw from both the Austin and San Antonio labor pools, he said.

Texas is a good fit for Noveon, Dunn said. The state has been synonymous with oil and gas for decades and Noveon touches many related sectors, from energy, environmental resources and sustainability.

"We would like to see how that develops, but in the meantime we're just bringing back critical technology to the States," Dunn said.