-HyProMag USA, a JV with CoTec Holdings Corp. (OTC: CTHCF), is building a U.S. rare-earth magnet supply chain through recycling instead of mining
-Rare-earth magnets likely a scarce strategic asset in a market dominated by China
-Real upside is creating a scalable national magnet manufacturing platform with 10 planned hubs starting in Texas, South Carolina and Nevada
-Texas plant already securing feedstock and signing customer contracts
-Positioned to benefit from growing demand in AI, robotics, EVs, aerospace and defense
-HyProMag sees over $2 billion in after-tax net present value (NPV) for first three plants
-CoTec Holdings, with a market cap around $115 million, could see significant appreciation via key catalyst: a potential IPO of HyProMag USA
By Jarrett Banks
For years, the West’s answer to China’s dominance in rare earths has been straightforward: find more mines. HyProMag USA, a joint venture with CoTec Holdings Corp. (OTC: CTHCF), is making a different bet.
Instead of spending billions extracting fresh ore, the company wants to mine yesterday’s technology–hard drives, electric motors, medical equipment and industrial scrap–for the permanent magnets that power everything from electric vehicles and robots to missile systems and data centers.
It’s an idea whose timing may finally be right. Permanent magnets have quietly become one of the most strategically important components in the global economy. They account for only a tiny fraction of the cost of an electric vehicle or industrial robot, yet without them, production stops.
China still dominates nearly every stage of the supply chain, from refining rare earths to manufacturing finished magnets, leaving Western manufacturers increasingly exposed to geopolitical risk. That has transformed magnet production from an industrial niche into a national-security priority.
Enter HyProMag, which believes recycling can become part of the solution. Using patented hydrogen-processing technology developed at the University of Birmingham, the company says it can recover high-value neodymium-iron-boron magnet material from end-of-life products while using significantly less energy than conventional production.
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More importantly, it isn’t trying to prove the science anymore – it spent the time and money to get the process camera ready. The company’s technology was developed over 15 years with more than $100 million in R&D investment, delivering magnet-to-magnet short-loop recycling that uses 88% less energy and reduces carbon emissions by 85% compared to conventional methods.
Now, the technology is ready to roll out. The company’s planned Dallas facility is designed to become the hub of a national recycling network, supported by collection centers located around the country.
Management projects annual production of approximately 1,048 metric tons of recycled sintered magnets annually, plus approximately 478 metric tons of co-products. That would make it one of the few meaningful domestic sources of rare-earth magnets outside the traditional mining model.
Investors should pay attention to the milestones that actually create value: financing, feedstock agreements, customer qualification and long-term supply contracts.
Encouragingly, those pieces are beginning to come together. The U.S. Export-Import Bank has issued a letter of interest for up to $92 million in financing under its Make More in America initiative, underscoring the strategic importance Washington places on rebuilding domestic supply chains. Government support alone won’t guarantee success, but it can lower financing costs and provide credibility with commercial customers.
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The broader backdrop is just as compelling as the project itself. Demand for permanent magnets is poised to expand well beyond electric vehicles. Industrial automation, humanoid robotics, AI data-center cooling systems, aerospace applications and defense modernization all require high-performance magnets. Even modest growth across these sectors could tighten a market that is already structurally dependent on Chinese production.
That creates an unusual investment proposition. Most rare-earth companies are effectively commodity stories, exposed to volatile prices, permitting delays and mining risk. HyProMag USA is attempting to position itself further downstream, where intellectual property, manufacturing know-how and customer relationships may ultimately prove more valuable than simply owning mineral reserves.
Investors often spend years searching for companies positioned ahead of structural shifts rather than reacting to them after the fact. The re-shoring of critical mineral supply chains appears to be one of those shifts. HyProMag USA isn’t simply trying to recycle magnets. It’s attempting to build an entirely new domestic supply chain around them.
There’s a catalyst ahead that could reward investors in JV parent CoTec Holdings. HyproMag is exploring a potential IPO, which would effectively look like a spin off and create a new publicly-traded stock. Based on forecast prices, the first three plants alone have an after-tax net-present value (NPV) of at least $2 billion, according to the company. Assuming CoTec owns roughly 50% of the economics, there’s a billion dollars in value for investors in CoTec, whose market cap is only around $115 million.
Investors may eventually view the company’s greatest competitive advantage not as its recycling technology, but as its ability to supply one of the world’s most strategically scarce industrial products from inside the U.S. Investors who notice the opportunity early may find CoTec shares downright magnetic.
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