Huahong Rare Earth Output Rises as NdFeB Scrap Recycling Supports Magnet Demand

Huahong Rare Earth

Huahong rare earth output increased sharply in 2025 as stronger demand from new energy vehicles, industrial automation and energy-saving motors lifted China’s rare earth recycling and magnet supply chain. Zhejiang Huahong Technology produced 8,794t of rare earth oxides during the year, up 71% from 2024.

Huahong rare earth output growth was also supported by tighter rare earth supply conditions in China. Stricter government controls on mining, processing and production capacity helped lift prices and encouraged stronger output from qualified oxide and magnet producers.

Huahong rare earth output is strategically important because the company recovers rare earth oxides from neodymium-iron-boron scrap. This recycling route gives China another feedstock source for magnet production at a time when primary supply, mining quotas and scrap availability remain sensitive.

Sales of rare earth oxides rose by 57% to 9,165t in 2025, while inventories increased by 7% to 359t. The figures show that downstream demand remained strong enough to absorb most of the company’s higher oxide output.

NdFeB Scrap Recycling Gains Value Under Tighter Rare Earth Supply

Huahong operates three production bases for NdFeB scrap recycling: Ji’an Xintai, Jishui Jincheng and Jiangxi Wanhong. Together, these sites have 12,000 t/yr of rare earth oxide capacity using neodymium-iron-boron scrap as feedstock.

This recycling capacity matters because magnet scrap is becoming a strategic rare earth resource. NdFeB magnets contain neodymium, praseodymium and, in higher-performance grades, heavy rare earths such as dysprosium and terbium.

Recovering these materials from scrap can reduce dependence on mined feedstock and improve supply efficiency. It also supports China’s circular rare earth strategy, especially as demand from electric vehicles, robotics and industrial motors rises.

Market participants said some oxide plants are facing shutdowns or output restrictions because their capacity exceeds government standards. Tighter mining quotas, limited spot availability and higher NdFeB scrap costs have also created pressure in the oxide market.

These conditions favour producers with approved capacity and secure scrap channels. Huahong’s stronger oxide output suggests that recycled feedstock is becoming more important in balancing China’s rare earth supply chain.

The company’s revenue rose by 41% to 7.83bn yuan in 2025, while profit increased by 157% to 204mn yuan. The profit growth shows how higher rare earth prices and stronger magnet demand improved margins across the business.

High-Performance Magnet Demand Drives Capacity Expansion

Huahong’s rare earth magnetic materials output rose by 27% to 15,791t in 2025. Sales increased by 19% to 14,035t, while inventories rose by 29% to 1,042t.

The growth reflects rising demand for high-performance magnets in new energy vehicles, industrial robots, automation systems and energy-saving motors. These sectors require magnets with stronger magnetic performance, thermal stability and reliability.

China produced 16.6mn new energy vehicles in 2025, up 29% from a year earlier. NEV sales rose by 28% to 16.5mn units, supporting demand for high-performance NdFeB magnets used in traction motors, pumps, sensors, braking systems and other vehicle components.

Huahong said high-performance NdFeB magnetic materials accounted for around 42% of China’s total magnet output last year. That share is likely to remain important as vehicles become more electrified, automated and motor-intensive.

Industrial robots also supported magnet demand. Global industrial robot output exceeded 600,000 units in 2025, with compound annual growth above 10%. Robotics growth increases demand for compact, efficient and high-torque motor systems.

Huahong plans to start trial operations at the first phase of its Baotou facility in May-June 2026. The first phase will add 10,000 t/yr of high-performance magnet capacity.

Once the first phase comes on line, Huahong’s total high-performance magnet capacity will reach 20,000 t/yr. This positions the company more deeply in the downstream magnet chain, not only in rare earth oxide recycling.

The expansion shows how China’s rare earth industry is moving toward integrated recycling, oxide production and magnet manufacturing. Companies with access to scrap feedstock and downstream magnet capacity may be better positioned as rare earth supply becomes more regulated.

The Metalnomist Commentary

Huahong’s growth shows that rare earth recycling is no longer a secondary supply story. As NEV and robotics demand rises, NdFeB scrap recovery is becoming a strategic feedstock route for China’s high-performance magnet industry.

China’s Recycled Rare Earth Output Drops in 2024 on Supply and Margin Pressures

China’s Recycled Rare Earth

Rare Earth Oxide Output Falls Despite Long-Term Growth

China’s recycled rare earth oxide (REO) output declined in 2024, primarily due to limited NdFeB magnet scrap supply and weaker plant margins. Ji’an Xintai Technology’s chairman, Liu Weihua, reported that REO output from NdFeB magnet scrap totaled 34,147 tonnes, down 14% from 2023 but up 2% from 2022.

This total includes 26,504t of praseodymium-neodymium oxide, along with smaller quantities of gadolinium, terbium, dysprosium, and holmium oxides. By comparison, China produced 39,662t of REO from scrap in 2023, indicating a clear year-over-year contraction in recycled supply.

Scrap Availability and Profitability Hit Recycling Plants

Liu noted that larger magnet manufacturers are producing less NdFeB scrap due to technology upgrades. This shift, combined with traders' reluctance to sell at lower prices, has constrained the scrap supply chain.

Meanwhile, rare earth recycling plants have seen shrinking profit margins amid firm scrap prices and falling REO market prices. To cope, many rough magnet manufacturers have started in-house recycling to improve resource efficiency and profitability.

China currently operates about 40 recycling plants for NdFeB scrap, with Jiangxi province accounting for 64% of the nation’s recycled REO output. Shandong and Jiangsu followed with 15% and 11%, respectively, consolidating over 86% of China's total recycling capacity.

China Maintains Global Dominance in Rare Earth Supply

Global REO output in 2024 reached 454,000 tonnes, with China contributing roughly 90% through its mining quotas, scrap recycling, and imports. Despite this year’s dip, China's REO recycling capacity surpassed 80,000t in 2024 and is expected to hit 100,000t in 2025.

As demand for NdFeB magnets surges globally, China’s long-term recycling potential remains strong, albeit challenged by short-term headwinds.

The Metalnomist Commentary

China’s temporary dip in recycled rare earth output reflects deeper structural tensions between supply control and market sustainability. The push for high-tech efficiency is narrowing scrap availability, but rising global magnet demand ensures that China's recycling sector will remain a pillar of strategic resource security.

NdFeB magnet recycling feedstock expands as HyProMag adds EV and wind rotors

NdFeB magnet recycling

NdFeB magnet recycling feedstock is widening beyond small electronics as HyProMag USA expands its supply pipeline. The company will now include rotors from electric motors, wind turbines, and other equipment in its feedstock agreement. Therefore, NdFeB magnet recycling feedstock could scale faster as larger, bulk streams enter the collection system.

NdFeB magnet recycling feedstock growth follows HyProMag’s July partnership with Intelligent Lifecycle Solutions, also known as ILS. The updated scope adds electric motors, wind turbine magnets, speaker assemblies, and MRI machines alongside hard disk drives. Meanwhile, the broader mix can improve resilience when any single scrap category tightens.

New collection streams target bulky magnets from electrification assets

NdFeB magnet recycling feedstock now includes rotor-based material that typically carries higher magnet mass per unit. This change matters because EV drivetrains and wind turbines hold concentrated rare earth magnet content. As a result, the expanded intake can support higher throughput and more predictable procurement.

ILS will continue to secure and store NdFeB material from HDDs at pre-processing sites in Williston, South Carolina and Reno, Nevada. The network can consolidate, sort, and stage material before downstream processing. However, bulk rotor streams may require different dismantling and demagnetisation steps than HDD-derived magnets.

Fort Worth commissioning links feedstock to scalable output capacity

NdFeB magnet recycling feedstock expansion supports HyProMag’s push toward commissioning a plant in Fort Worth, Texas. The partners will form a joint team to accelerate purchases as the facility advances. Therefore, procurement speed becomes a near-term competitive lever as more recyclers chase the same magnet-rich scrap.

The Texas plant is designed for 750 tonnes per year of recycled sintered NdFeB magnets and 807 tonnes per year of NdFeB co-products. The long operating-life plan signals an industrial-scale strategy rather than a short pilot cycle. Meanwhile, downstream users will watch qualification, purity, and consistency as the product slate develops.

The Metalnomist Commentary

NdFeB magnet recycling feedstock from motors and wind assets can unlock bigger volumes than HDD-centric sourcing. However, collection logistics and contamination control will decide real yields. Therefore, HyProMag’s joint procurement model with ILS looks strategically timed.

HyProMag Rare Earth Magnet Recycling Plant Opens in Germany

HyProMag

HyProMag rare earth magnet recycling has moved into commercial-scale production in Germany after the company opened a new recycling and manufacturing plant in Pforzheim. The facility strengthens Europe’s effort to build a circular rare earth magnet supply chain outside China.

HyProMag rare earth magnet recycling will focus on neodymium-iron-boron magnets and alloys. The plant will start with 100 t/yr of production capacity, with plans to increase output to 350 t/yr.

HyProMag rare earth magnet recycling is strategically important because NdFeB magnets are critical for electric vehicles, wind turbines, robotics, electronics, defence systems and industrial motors. Europe needs more local magnet capacity as China continues to dominate rare earth processing and magnet production.

The plant is permitted for production of up to 750 t/yr. HyProMag and parent company Mkango Resources are evaluating a scale-up to that level over the next three years.

HPMS Technology Targets Magnet Scrap Recovery

The Pforzheim plant will use Hydrogen Processing of Magnet Scrap technology, known as HPMS. The process was developed at the University of Birmingham and is designed to recover rare earth magnets from scrap streams more efficiently.

This technology matters because magnet recycling can reduce dependence on mined rare earth feedstock and conventional separation routes. It can also shorten supply chains by recovering material already embedded in end-of-life products and industrial scrap.

Recycled NdFeB magnets can support European manufacturers that need secure and traceable supply. Automotive, wind power, electronics and defence customers increasingly want material with clearer origin and lower supply-chain risk.

The initial 100 t/yr capacity is modest compared with China’s magnet industry. However, the strategic value lies in proving that commercial-scale recycling and magnet manufacturing can operate inside Europe.

The planned expansion to 350 t/yr, and potentially 750 t/yr, would make the site more meaningful for regional supply. It would also help Europe develop technical expertise in magnet scrap collection, processing, alloying and remanufacturing.

EU Critical Raw Materials Strategy Gains Recycling Base

HyProMag’s German plant fits directly into Europe’s critical raw materials strategy. The EU wants to reduce dependence on imported rare earth materials by supporting domestic mining, separation, recycling and manufacturing capacity.

Mkango Resources adds another layer to this strategy. The Canadian company owns a rare earths project in Malawi and a proposed rare earths separation plant in Poland.

Both projects have been selected as strategic projects under the EU Critical Raw Materials Act. This gives Mkango a broader position across upstream rare earth resources, midstream separation and downstream magnet recycling.

The German plant therefore is not just a standalone recycling facility. It could become part of a wider European rare earth value chain connecting African feedstock, European separation and recycled magnet production.

For Europe, this model is important. Mining alone will not solve rare earth dependence if separation, metal making, alloying and magnet manufacturing remain concentrated elsewhere.

HyProMag’s Pforzheim facility helps address one of the most difficult parts of the chain: turning rare earth scrap into usable magnet products. If the company scales successfully, it could support a more resilient European magnet ecosystem.

The Metalnomist Commentary

HyProMag’s plant shows that Europe’s rare earth strategy is moving from policy ambition into industrial execution. The key test will be whether recycling capacity can scale fast enough to supply real magnet demand in EVs, wind power and defence.

Heraeus Remloy Magnet Recycling Sale Strengthens Mkango’s European Rare Earth Platform

Heraeus

Heraeus Remloy magnet recycling is set to move under Mkango Resources after Germany-headquartered Heraeus agreed to sell its rare earth magnet recycling unit to the Canadian company. The deal gives Mkango direct access to a German platform for producing neodymium-iron-boron alloy powders.

Heraeus Remloy magnet recycling is strategically important because NdFeB powders can be used by customers to manufacture new permanent magnets. These magnets are critical for electric motors, wind turbines, robotics, electronics, defence systems and advanced industrial equipment.

Heraeus Remloy magnet recycling operates from Bitterfeld in Saxony-Anhalt. The facility can produce 600 t/yr of rare earth magnetic powders, with potential to ramp up to 1,200 t/yr.

The transaction is expected to close in summer 2026, subject to regulatory approvals. Financial details were not disclosed.

Bitterfeld Facility Adds NdFeB Powder Capacity

Heraeus Remloy was developed as an in-house startup within Heraeus. Its focus on NdFeB alloy powders places it in a valuable part of the magnet recycling chain.

This matters because recycling rare earth magnets is not only about collecting scrap. The material must be processed into usable feedstock that magnet makers can qualify and reuse.

The Bitterfeld plant gives Mkango an operational base in Germany, one of Europe’s core advanced manufacturing markets. That location could support customers seeking regional rare earth magnet materials with stronger supply-chain traceability.

The facility’s 600 t/yr current capacity is modest in global terms, but meaningful for Europe’s early-stage magnet recycling industry. The option to ramp up to 1,200 t/yr adds future flexibility if demand strengthens.

For Mkango, the acquisition can deepen its downstream rare earth position. Instead of focusing only on mining or separation, the company gains a route into recycled magnet powder production.

Europe’s Magnet Recycling Chain Gains Strategic Relevance

The deal comes as Europe tries to reduce dependence on China-dominated rare earth and magnet supply chains. Recycling is becoming one of the fastest practical routes to add regional material availability.

NdFeB magnets contain neodymium and praseodymium, and some high-performance applications also use dysprosium or terbium. Recovering these materials from magnet scrap can reduce pressure on primary supply and improve circularity.

Permanent magnet recycling also supports European industrial policy. Automotive, wind power, automation and defence manufacturers increasingly need secure, traceable and lower-risk sources of magnet materials.

However, recycled powders still need customer qualification. Magnet producers require consistent chemistry, particle characteristics and performance before they can use recycled feedstock at scale.

Mkango’s challenge will be to turn the Bitterfeld asset into a reliable commercial platform. If it can expand production and secure customers, the acquisition could strengthen Europe’s rare earth recycling ecosystem.

The Metalnomist Commentary

Mkango’s purchase of Heraeus Remloy shows that rare earth recycling is moving from concept to industrial asset consolidation. Europe’s magnet security will depend on practical facilities like Bitterfeld that can convert scrap into qualified, reusable magnetic materials.

HyProMag Secures Magnet Scrap to Power US Rare Earth Recycling

HyProMag USA

HyProMag secures magnet scrap to underpin a Texas recycling and manufacturing hub. By locking supply with ILS, HyProMag secures magnet scrap from HDDs and other streams. As a result, HyProMag secures magnet scrap that strengthens US NdFeB circularity and reduces import dependence.

Texas hub targets HDDs and high-growth data centers

HyProMag will build a rare earth magnet recycling and manufacturing facility in Dallas–Fort Worth. The project targets HDD recycling as large data centers expand. ILS will stage NdFeB feedstock at Williston and Reno. The sites will collect HDD magnets and other eligible materials.

Capacity and feedstock broaden beyond HDD magnets

The DFW hub is designed for 750 t/yr of recycled sintered NdFeB magnets. It also plans 807 t/yr of NdFeB co-products over a 40-year life. HyProMag has already processed rotors, wind turbine magnets, speaker assemblies, and MRI systems. Therefore, diversified feed unlocks steadier plant utilization and product mix.

HyProMag’s agreement with ILS improves logistics and inventory control. The arrangement secures storage and pre-processing near feed sources. Meanwhile, US siting supports shorter lead times for domestic buyers. This could enhance supply chain resilience for EVs, electronics, and industrial motors.

Downstream customers seek traceable, low-carbon magnet supply. Recycled NdFeB can cut primary mining intensity. In turn, reliable scrap flows help stabilize pricing and delivery. The initiative aligns with growing US policies backing critical material recovery.

The Metalnomist Commentary

This move elevates US magnet circularity at a pivotal time for data-center growth. Watch for offtake deals with motor and storage OEMs; they will determine scale-up pace and pricing power.

IonicRE Rare Earth Oxide Supply to AML Advances US Defence Magnet Chain

Ionic Rare Earth

IonicRE rare earth oxide supply to Advanced Magnet Lab marks a small but strategic step in building a non-China supply route for defence-grade permanent magnets. The Australian rare earths miner, refiner and recycler has started shipping high-purity rare earth oxides from its Belfast recycling facility to the US magnet producer.

IonicRE rare earth oxide supply currently involves kilogram-scale volumes of neodymium, praseodymium and dysprosium oxides. The material has 99.5-99.9% purity and will be used by AML to produce high-grade sintered neodymium-iron-boron magnets for US defence customers.

IonicRE rare earth oxide supply is important because magnet qualification starts with small, tightly controlled shipments. These early volumes help validate chemistry, process compatibility and performance before larger commercial deliveries begin.

The companies are already discussing a second sale of neodymium and dysprosium. They have also signed a non-binding memorandum of understanding for longer-term cooperation, with future commercial volumes likely to reach tonnes in 2027.

Belfast Recycling Turns Magnet Scrap Into Strategic Feedstock

IonicRE’s Belfast facility currently has 10 t/yr of rare earth recycling capacity. While modest, it gives western magnet producers a practical source of recycled rare earth oxides from end-of-life and industrial magnet scrap.

The supply chain includes used NdFeB magnet feedstock from German manufacturer Vacuumschmelze and scrap handler European Metal Recycling. IonicRE also has offtake relationships with automotive companies including Ford, Bentley and Wrightbus.

This structure matters because rare earth recycling can shorten supply chains and improve traceability. It also reduces dependence on newly mined material at a time when rare earth separation and magnet production remain highly concentrated in China.

The company’s planned additional Belfast facility received £12mn from the UK government in January. That plant is expected to produce 400 t/yr of light rare earths neodymium-praseodymium, as well as heavy rare earths dysprosium and terbium, by the first half of 2028.

Dysprosium is particularly important for defence magnets because it helps maintain magnetic performance under heat and stress. That makes recycled heavy rare earth recovery strategically valuable, even at relatively small volumes.

AML Link Connects Recycling to Defence Magnet Production

AML will use IonicRE’s oxides to produce high-grade sintered NdFeB magnets for defence applications. This connects recycled rare earth feedstock directly to one of the most sensitive parts of the US critical minerals supply chain.

The US is trying to secure rare earth permanent magnet supply outside China after Beijing imposed export controls on rare earth permanent magnets in April 2025. China controls about 90% of the supply chain, leaving US defence and industrial users exposed to licensing risk.

IonicRE brings a wider rare earth platform to the partnership. The company owns 60% of Uganda’s Makuutu rare earth project, holds a 50% stake in a Brazilian rare earth refining joint venture with Viridis, and has signed an MoU with US Strategic Metals for a Missouri recycling facility.

That portfolio gives IonicRE several possible feedstock and processing routes. But the AML shipment is important because it moves from strategy into physical supply.

The key challenge now is scale. Kilogram shipments can support qualification, but defence and industrial magnet markets will need repeatable tonne-scale supply, consistent purity and reliable delivery.

If IonicRE and AML can move from pilot volumes to commercial supply, the partnership could become a useful building block in the US rare earth magnet chain. It would also show how recycling can complement mining and refining in reducing China exposure.

The Metalnomist Commentary

This shipment is small in volume but large in strategic meaning. Non-China rare earth supply chains will be built through qualification steps like this, where recycled oxides prove they can become defence-grade magnets.

HyProMag to triple magnet capacity with US hub-and-spoke expansion

HyProMag

HyProMag to triple magnet capacity as it builds a US hub-and-spoke network. HyProMag to triple magnet capacity by adding sites in Nevada and South Carolina. HyProMag to triple magnet capacity to strengthen rare earth magnet recycling.

DFW hub anchors a national recycling network

HyProMag is advancing a Dallas–Fort Worth hub for NdFeB magnet recycling and manufacturing. The DFW facility will produce 750 t/yr of recycled sintered NdFeB magnets. It will also deliver 807 t/yr of NdFeB co-products over a 40-year life. Commercial operations are scheduled to begin in the first half of 2027.

Spokes in Nevada and South Carolina accelerate feedstock and scale

The company is studying new facilities in Reno and Williston to supply the hub. This hub-and-spoke model reduces logistics and speeds scrap-to-magnet turnaround. The expansion study supports up to four additional magnet production lines. Partner ILS is stockpiling HDD magnet scrap and providing site-sharing at both spokes.

The Metalnomist Commentary

The plan tightens US circular supply for NdFeB magnets as demand rises in EVs, wind, and electronics. Execution risk centers on feedstock continuity and end-market qualification, but early HDD scrap aggregation is a smart hedge.

HyProMag May Get $92mn for Rare Earth Magnet Recycling

HyProMag

HyProMag Expands Rare Earth Recycling with US Support

HyProMag may receive up to $92mn from the US Export-Import Bank to build a rare earth magnet recycling and production hub in Texas. The proposed financing, with a 10-year repayment term, would support the development of a Dallas-Fort Worth facility capable of processing 750 tonnes of recycled NdFeB magnets annually. The hub will also produce over 800 tonnes of NdFeB co-products.

The project is part of HyProMag’s broader effort to commercialize hydrogen processing of magnet scrap recycling technology across the UK, Germany, and the US. The Texas facility is expected to take five years to commission and operate for 40 years, positioning HyProMag as a key player in securing North American rare earth supply chains.

Strategic Positioning in Critical Raw Materials

HyProMag’s US expansion includes pre-processing facilities in South Carolina and Nevada, which will support the main Texas hub. This network is designed to create a domestic supply chain for recycled rare earth magnets, reducing reliance on primary extraction and overseas suppliers.

Investor Mkango Resources also links the project to its international portfolio, including Malawi’s Songwe Hill rare earths mine and Poland’s Pulawy separation project. Both projects are recognized under the EU Critical Raw Materials Act, highlighting their strategic importance in diversifying global rare earth supply.

The Metalnomist Commentary

HyProMag’s planned Texas hub signals a decisive shift toward circular economy solutions in the rare earth sector. If secured, the $92mn financing would not only strengthen US supply chain independence but also reduce environmental impacts from mining. This move underscores growing geopolitical pressure to secure rare earth materials domestically.

China's Baotou City to Expand Rare Earths Separation Capacity Amid Growing Demand

Baotou, a city in northern China's Inner Mongolia region, is set to significantly increase its capacity for rare earth smelting and separation in response to rising global demand. The city, already the world’s largest supplier of rare earth feedstock, plans to boost its output capacity to 234,000 metric tons per year by the end of 2024. This move will further cement Baotou’s strategic position in the global rare earths industry, which is critical for various high-tech and clean energy applications.

Northern Rare Earth (NRE), one of China’s leading light rare earth producers, is at the forefront of this expansion. The company is upgrading its smelting project at its Baotou Huamei subsidiary, which will increase the site’s rare earth extraction and separation capacity to 106,000 metric tons per year. This upgrade is a key component of Baotou's broader effort to expand its rare earths smelting and separation output.

In addition to this, NRE is expected to complete the construction of a neodymium-iron-boron (NdFeB) scrap recycling facility in Baotou, with a capacity of 4,000 metric tons per year. This will be the city’s first NdFeB recycling production line, further diversifying its rare earths industry.

The value of Baotou's rare earth industry output is projected to rise to 100 billion yuan ($14 billion) by 2024, up from 82.9 billion yuan in 2023. The city's output capacity for rare earth magnetic materials is expected to reach 159,000 metric tons by the end of this year, an increase from 135,000 metric tons in 2023, solidifying Baotou's position as the leading producer of these materials globally.

Baotou is also advancing its development of the rare earth permanent magnet motor industry, with ambitions to become the world’s largest rare earth application base. Wolong Electric Drive, a major manufacturer, is constructing a new motor facility in the city’s rare earths high-tech industrial development zone. The facility, expected to begin operations by the end of 2024, will produce 52,000 units of new energy vehicle motors, 32,000 units of low-speed high-power permanent magnet motors, and 1,300 units of wind turbine motors annually.

Chinese steel producer Baogang has already integrated 1,891 rare earth permanent magnet motors into its operations, with plans to replace over 40,000 traditional motors in the future. These advanced motors offer significant advantages over traditional ones, including a 10-20% reduction in electricity usage, a 50-75% decrease in volume and weight, and a 2-19% improvement in magnet performance.

In May, the government of the Inner Mongolia Autonomous Region announced a plan to accelerate the replacement of traditional motors with rare earth permanent magnet motors. This initiative is part of a broader strategy to reduce energy consumption and enhance efficiency in the industrial sector.

High-Purity Iron Plant Targets US Rare Earth Magnet Supply Gap

Hertha Metals

High-purity iron is emerging as a hidden bottleneck in the US rare earth magnet supply chain as new defense sourcing rules approach. Houston-based Hertha Metals plans to build a 10,000 t/yr plant in Texas to produce high-purity iron used in neodymium-iron-boron permanent magnets.

The project targets a less visible vulnerability in magnet manufacturing. US policy has focused heavily on rare earth elements such as neodymium and praseodymium, but NdFeB magnets also require high-purity iron. Hertha Metals says about 90% of this material is currently produced in China.

The timing is strategically important. Updated Defense Federal Acquisition Regulations are set to take effect on 1 January 2027, restricting Chinese-origin rare earth magnets and constituent materials in covered US defense systems. That rule could force defense contractors, magnet makers and upstream material suppliers to rebuild supply chains around non-China sources.

Hertha Metals plans to break ground later this summer. The company says its Texas plant will become the first domestic producer of high-purity iron for this application, positioning the project at the intersection of magnet security, steelmaking technology and US industrial policy.

DFARS Rules Put Magnet Inputs Under Supply Chain Pressure

The 2027 DFARS deadline changes the strategic value of upstream magnet materials. Compliance will not depend only on where final magnets are assembled. It will also depend on the origin of constituent materials used in defense-related systems.

This creates a direct opportunity for domestic high-purity iron. NdFeB magnets require neodymium, praseodymium and often dysprosium or terbium for performance, but iron remains the major base component. If high-purity iron remains China-dependent, US magnet supply chains could still face compliance risk even if rare earth oxides or metals are sourced elsewhere.

Hertha Metals is trying to address that gap with its FLEXHERS process, short for flexible fuel hydrogen electric reduction smelting. The process combines electric arc furnace technology with natural gas or hydrogen to produce iron and steel.

The company says the technology can use lower-grade ores and iron ore fines that are difficult to process economically through conventional blast furnace routes. This could widen the domestic feedstock base and reduce dependence on imported high-purity iron.

Hertha currently operates a one-tonne-per-day demonstration plant in Conroe, Texas. It describes the site as the largest demonstration-scale single-step steelmaking facility in the US. Ore is sourced domestically from Minnesota, and the pilot facility is already producing material that meets customer specifications.

The planned high-purity iron facility will also produce trial steel products. Hertha sees the project as a stepping stone toward broader iron and steelmaking capacity, with a target of reaching roughly 500,000 t/yr of production within four to five years.

Cost competitiveness will be critical. Hertha says it does not plan to rely on a domestic supply premium. Instead, it aims to compete economically by replacing metallurgical coal with natural gas and electricity while using lower-cost ore feedstocks.

This claim matters because strategic materials projects often struggle when policy support is stronger than market economics. If Hertha can produce competitively without relying on premium pricing, the company could build a more durable position in both defense and commercial supply chains.

Hertha Metals CEO Laureen Meroueh

Domestic Iron Production Links Magnets, Electrical Steel and Clean Manufacturing

High-purity iron has strategic importance beyond NdFeB magnets. The material can also support electrical steel used in transformers, electric vehicle motors and other electromagnetic applications. These sectors are becoming more important as grid investment, electrification and domestic manufacturing policy expand.

The project also fits a wider shift in iron and steel markets. Traditional blast furnace production depends heavily on metallurgical coal and higher-emission processing routes. Meanwhile, demand for higher-grade iron inputs suitable for lower-carbon steelmaking is expected to rise as producers shift toward cleaner technologies.

Hertha’s process aims to sit inside that transition. By using electricity, natural gas or hydrogen, the company is positioning FLEXHERS as a lower-carbon alternative to legacy ironmaking. The ability to process lower-grade ore and fines could also help revive domestic iron production without requiring only premium feedstocks.

The US steel industry has increasingly focused on scrap-fed electric arc furnaces. That model supports recycling and lower emissions, but it does not fully solve domestic iron supply for high-purity applications. Magnets, electrical steel and advanced components often need controlled chemistry that scrap alone cannot easily provide.

This is where Hertha’s strategy becomes industrially relevant. The company is not only proposing another steel plant. It is targeting a specific materials gap between critical minerals policy, rare earth magnet manufacturing and advanced steelmaking.

Competition from subsidized overseas producers remains a risk. Hertha says it can compete on cost, but Chinese industrial support and below-cost exports could still challenge domestic producers. This is why policy, procurement rules and long-term customer commitments may become important even if the production technology works.

The company has not disclosed financing details, future fundraising plans or offtake agreements. That leaves open questions about capital structure, customer readiness and the pace of commercial scale-up. However, the 2027 DFARS deadline gives the project a clear market catalyst.

The broader implication is that rare earth magnet supply security cannot be solved by rare earth mining alone. The full chain includes ore, separation, metal conversion, alloying, magnet manufacturing and supporting inputs such as high-purity iron. Any weak link can create dependence.

Hertha Metals is betting that the next phase of US critical materials policy will recognise that reality. If the company can scale production, secure customers and maintain cost discipline, high-purity iron could become a small but essential piece of the domestic magnet supply chain.

The Metalnomist Commentary

Hertha Metals highlights a critical point often missed in rare earth policy: magnet security depends on more than rare earths. High-purity iron, electrical steel and alloy inputs will become strategic materials if US defense and electrification supply chains must move away from China.