Rare Earth Exchanges

Nidec & Noveon Magnetics Strike Rare Earth Magnet Deal: A Step Toward U.S. Supply Chain Resilience-But at What Cost?

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Highlights

  • Japan’s Nidec Motor Corporation and Texas-based Noveon Magnetics secure a five-year agreement for over 1,000 tons of sintered NdFeB rare earth magnets.
  • The partnership aims to reduce U.S. dependence on China’s rare earth supply chain and support domestic high-performance magnet production.
  • This strategic deal represents a milestone in reshoring critical materials production.
  • Long-term success depends on cost competitiveness and government support.

In what could be a significant move to reduce the U.S.‘s dependence on foreign rare earth magnet supplies, Japan-headquartered Nidec Motor Corporation (opens in a new tab) and Texas-based Noveon Magnetics (opens in a new tab) have entered a five-year off-take agreement to secure more than 1,000 tons of sintered NdFeB rare earth magnets.

Bolstering U.S. Originated Rare Earth Magnets

This partnership purportedly will strengthen Nidec’s supply chain for motors used in industrial, automation, and defense applications while reinforcing Noveon’s role as the sole U.S. producer of high-performance magnets, the company claims in its press release.

The deal directly addresses geopolitical risks associated with China’s dominance in the rare earth supply chain, addressing a major strategic vulnerability in American industry.

What’s the Deal’s Strategic Benefit?

The agreement directly supports U.S. efforts to localize critical materials production, mitigating exposure to China’s near-monopoly on rare earth extraction, refining, and magnet manufacturing. For Nidec, which has manufacturing locations in the United States, Mexico, China, and the United Kingdom, this ensures stable access to high-performance magnets essential to its motor production, reducing supply chain disruptions that have plagued industrial manufacturing in recent years.

Noveon, on the other hand, secures a long-term buyer, reinforcing its business model as a sustainable, domestic supplier of rare earth magnets. This move aligns with broader U.S. industrial policy goals of reshoring key supply chains, particularly for national security and energy transition sectors.

REEx Discussions

The press release avoids discussion of pricing dynamics, which will be crucial given China’s ability to undercut competitors through state-backed price manipulation. Additionally, it does not specify whether Noveon’s production capacity can meet the expected scale, nor does it outline the supply chain for raw materials—where will the rare earths be sourced, and how will Noveon ensure cost competitiveness against Chinese and Southeast Asian suppliers?

While Noveon touts its recycling-based process, the feasibility of scaling this up to meet rising demand remains uncertain. The release also sidesteps whether Noveon’s production is backed by government incentives such as DoD or DOE funding, which could play a critical role in sustaining its competitiveness. Noveon has raised at least $78 million (opens in a new tab) in a few different investment rounds.

Founded in 2014 and based in San Marcos, Texas, Noveon Magnets has raised more than $35 million from the U.S. Department of Defense. The funding has helped Noveon become a rare earth magnet recycler and manufacturer.  Noveon has also raised funding from investment firms and other sources, including:

  • Canadian Shield Capital
  • Aventurine Partners
  • Ngp
  • Undisclosed investors

This deal assumes that Noveon can reliably deliver on its commitments without cost overruns or production delays—a challenge for any emerging U.S. rare earth company competing against entrenched global players. It also banks on U.S. policy remaining favorable to reshoring rare earth magnet production. Should market conditions shift, Chinese pricing strategies change, or subsidies dry up, Noveon may struggle to compete on cost.

Additionally, Nidec’s reliance on a single U.S. supplier poses potential scalability and redundancy risks if demand outstrips Noveon’s production capacity. This agreement marks a milestone in strengthening the U.S. rare earth magnet supply chain, but its long-term success hinges on cost competitiveness, government support, and Noveon’s ability to scale production. While a step toward reshoring critical materials, the U.S. rare earth industry remains considerably vulnerable without parallel investments in domestic rare earth mining, refining, and diversified supply sources. Will Noveon be able to sustain production at scale and cost parity with China—or will U.S. policy support be required to keep it viable in the long run?

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