The American company Noveon Magnetics, based in Texas, has closed a $215 million funding round to expand its industrial capacity in the United States and strengthen local supply of rare earth magnets, a critical component in sectors ranging from automotive and electronics to defense. The operation, reported by The Wall Street Journal and echoed by Tom’s Hardware, is part of a broader movement: rebuilding a domestic supply chain that has relied on China for key materials and processes for years.
Rare earth magnets — especially those based on neodymium — are essential for high-efficiency electric motors, wind turbines, industrial systems, and multiple military applications. Their importance has increased with electrification and the demand for advanced computing hardware, including Artificial Intelligence (AI), which is stressing several component supply chains. Washington faces a twofold challenge: on one hand, the global concentration of capacities in China; on the other, the time needed to establish or scale domestic production (years, not months), even with abundant capital.
A dominant investor with seats on the board
According to published information, Noveon’s funding round was almost entirely led by One Investment Management, the investment vehicle of Rajeev Misra (former head of SoftBank’s Vision Fund). In the distribution, $200 million comes from this firm, which will also hold two seats on the company’s board and act as a key shareholder. The clear takeaway: private capital not only invests in industrial capacity but also seeks direct influence over the execution of a strategy that depends on technical decisions, contracts, and construction timelines.
It’s not just Noveon: the rise of “reshoring” in critical minerals
Noveon’s round is not isolated. By 2025, capital flows into US startups focused on critical minerals reached record levels: Tom’s Hardware estimates that venture capital investments totaled around $630 million for the entire year.
Meanwhile, larger industrial projects aim to cover entire segments of the supply chain — from processing to magnet fabrication — combining loans, private investment, and public support:
- Vulcan Elements, which plans to build a magnet manufacturing facility in North Carolina, has outlined a financial package highlighted by a conditional loan of $620 million from the U.S. Department of Energy, alongside other private contributions.
- On the corporate front, MP Materials has accelerated its magnet strategy in the U.S. with industrial contracts (such as agreements to supply magnets to automakers) and increasing public sector involvement: Reuters reported an operation where the Department of Defense became the largest shareholder after a significant investment, emphasizing the strategic importance of secure supply.
This pattern — private funds but also state participation via loans, guaranteed purchases, or even equity positions — aims to reduce risks in a capital-intensive business that would otherwise take too long to take off.
The Chinese leverage and the concentration challenge
Geopolitical context underpins this effort. China maintains a dominant position in refining and processing rare earths and has periodically used export controls as leverage in trade disputes. Reuters noted that China refines approximately 90% of the world’s rare earths and that the U.S. has historically been highly dependent on Chinese imports.
The practical consequence is that, even with new plants in Texas or North Carolina, the transition is not instantaneous: launching industrial capacity, qualifying production, closing supply contracts, and securing raw materials all take time. Therefore, industry analysts and lawmakers see the real goal not as winning the global magnet market immediately but as building resilience: establishing enough capacity to prevent external restrictions from crippling critical industries.
Resilience: factories… and strategic reserves
The US strategy increasingly resembles energy security logic: it’s not enough to produce more; storage is also essential. In January 2026, Axios reported a legislative proposal to create a $2.5 billion reserve of critical minerals, including products like rare earth magnets, to buffer future supply shocks.
Additionally, the US government has explored ways to decompress trade tensions. AP reported a bilateral agreement to accelerate exports of minerals and magnets from China to the U.S. following delays related to permits and restrictions — a reminder that dependency remains a tangible operational reality.
What can and cannot change in the short term
The financing round for Noveon bolsters a sector that has long been a “forgotten piece” of reindustrialization efforts. Yet, even in the best-case scenario, the American industry will contend with several realities:
- Long timelines: constructing and scaling plants are multi-year endeavors, not quarterly cycles.
- Raw material dependence: manufacturing magnets alone does not resolve the bottleneck of processed minerals and associated chemicals.
- Global market and costs: competing with established ecosystems requires efficiency, stable contracts, and often sustained government support.
In this context, Noveon’s funding can be seen less as an immediate solution and more as a strategic bet: having enough capacity to ensure that, when trade frictions or restrictions occur, the U.S. will not be left without one of the smallest — yet most critical — pieces of the electrified economy.
Frequently Asked Questions
What are rare earth magnets and why are they so important for electric vehicles and wind turbines?
Because they enable more compact and efficient motors and generators, leading to better energy performance and lighter designs in industrial applications.
How long does it typically take to get a magnet factory up and running in the U.S.?
Usually years, involving construction, process validation, industrial qualification, and stable scaling of production.
Why does the U.S. government invest as a shareholder or financier in critical mineral companies?
To ensure supply for strategic sectors and reduce investment risks in capital-heavy ventures, using tools like loans, guaranteed purchases, or equity stakes.
Can the U.S. reduce reliance on China without halting international trade?
In the short term, it’s challenging: even with new plants, the global supply chain remains concentrated. The strategy is more about resilience and redundancy than immediate self-sufficiency.
References: WSJ and tomshardware