Mkango secures Texas Hub power as rare-earth magnet project advances

Mkango Magnetic Materials Limited (AIM/TSXV: MKA), the Vancouver-based critical minerals and rare-earth magnet recycling company, has announced that HyProMag USA secured electrical power capacity with Oncor Electric Delivery Company for its planned Texas magnet recycling and manufacturing facility. The 13 October 2026 announcement represents progress toward establishing domestic United States production capabilities for permanent magnets used in advanced manufacturing, electric vehicles, robotics and defence applications. The project is targeting initial cutting and finishing operations in the first half of 2027, with its integrated Phase 1 development scheduled for completion around mid-2028.

The Texas Hub is designed to produce approximately 550 tonnes annually of neodymium-iron-boron magnet blocks and finished magnets in Phase 1, alongside approximately 484 tonnes of co-products. Its longer-term Phase 2 configuration envisages total payable production of approximately 1,526 tonnes per annum. The development comes amid growing interest in alternative rare-earth supply chains, although obtaining utility capacity is only one of several requirements before commercial production can begin.

Mkango shares closed at approximately 38 pence on AIM on 13 October, up 1.33% during the session. The modest gain followed a period of considerable share-price volatility and provides limited evidence about how investors are valuing the Texas project independently of the company’s other activities. For shareholders, the more consequential issue is whether the infrastructure progress can translate into funded construction, commercially qualified products and recurring operating revenue.

Why is securing electricity capacity important for Mkango’s Texas rare-earth project?

Rare-earth magnet manufacturing requires dependable energy infrastructure to support industrial processing equipment, recycling operations, finishing systems and quality-control activities. Securing appropriate electrical capacity early in development helps reduce the risk that a completed facility is subsequently constrained by an inadequate power connection. It also allows engineering contractors to progress plant design against clearer utility assumptions.

HyProMag USA confirmed that the Oncor arrangements cover its initial cutting and finishing operations and Phase 1 development. The company also described a potential route to supporting Phase 2 through an electricity substation upgrade. Importantly, that additional expansion-related infrastructure should be treated as a future development requirement rather than an already completed enhancement.

The company expects its electricity requirements to be supplied predominantly from renewable energy resources. That intention is consistent with the sustainability positioning of recycled magnet production, but the announcement does not establish that all future power supply will be renewable or that energy costs have been permanently fixed. Electricity pricing, connection arrangements and operating reliability will remain relevant to the project’s eventual production economics.

The infrastructure milestone is accompanied by progress in other preparatory activities. Weston Solutions is advancing permitting work, while PegasusTSI has commenced the contractor-selection process for cutting and finishing operations. These developments indicate that the project is progressing beyond early conceptual planning, although contractor selection and permitting activity do not amount to completed construction or final regulatory authorisation.

How much rare-earth magnet production could the Texas Hub eventually deliver?

The project is being developed in stages, creating an important distinction between initial manufacturing activity and fully integrated recycling capacity. The first operational phase, targeted for commissioning in the first half of 2027, is intended to process magnet blocks supplied initially from other HyProMag Group operations. Those blocks would then undergo cutting, finishing and customer qualification in the United States.

This approach offers a potential route to establishing customer relationships and domestic finishing capabilities before the main integrated facility is completed. It could also allow the business to develop operational experience, quality-management systems and product traceability procedures ahead of larger-scale production. Nevertheless, initial finishing operations should not be represented as equivalent to the full Texas recycling and manufacturing process.

The integrated Phase 1 development, targeted for mid-2028, is designed to produce approximately 550 tonnes annually of magnet blocks and finished magnets, plus 484 tonnes of co-products. The combined total of 1,034 tonnes represents different payable product categories rather than 1,034 tonnes of finished rare-earth magnets. Maintaining that distinction is essential when comparing the project with other magnet manufacturers.

Phase 2 would increase the planned magnet block and cylinder output to approximately 1,048 tonnes annually, with an additional 478 tonnes of co-products. This would bring envisaged total payable production to approximately 1,526 tonnes a year. These figures describe design targets, not current production or contracted sales volumes.

What makes recycled rare-earth magnets strategically important for the United States?

Neodymium-iron-boron magnets are used in applications that require compact, powerful magnetic components, including electric motors, industrial automation, wind-energy equipment and specialised defence systems. Their manufacture depends on access to rare-earth materials and processing technologies, creating supply-chain exposure for industries seeking to increase domestic sourcing. Recycling offers one potential route to recovering magnetic materials from products and manufacturing waste already circulating within industrial economies.

HyProMag’s technology is intended to recover magnet-grade material from sources including electric vehicle motors, industrial machinery, consumer electronics and manufacturing scrap. Its hydrogen-based recycling process aims to shorten the production pathway compared with processes that break down materials and rebuild the supply chain from primary mineral extraction. Commercial advantages would depend on feedstock quality, recovery performance, production costs and the ability to manufacture products meeting customer requirements.

The Texas facility is also intended to support product qualification against recognised materials standards and customer-specific specifications. This is particularly important in automotive, aerospace and defence-related applications, where components may require stringent performance, traceability and reliability testing. Building a facility does not automatically create an approved supplier relationship, and qualification can remain a commercial bottleneck even after equipment is operational.

The opportunity is therefore larger than simply adding theoretical magnet production capacity. A successful operating model would require dependable feedstock sourcing, repeatable production quality, competitive pricing and contracted customers. Without those elements, a manufacturing facility could possess strategic relevance while still struggling to generate attractive returns.

How much of HyProMag USA’s economic value belongs to Mkango shareholders?

The ownership structure is an important consideration when assessing the project’s potential contribution to Mkango Magnetic Materials. HyProMag USA is owned equally by CoTec Holdings Corp. and HyProMag Limited. HyProMag Limited is owned through Maginito Limited, in which Mkango holds 79.4% and CoTec owns the remaining 20.6%.

Based on that disclosed ownership chain, Mkango has an indirect economic interest of approximately 39.7% in HyProMag USA before considering any additional contractual rights, financing arrangements or changes to the capital structure. This matters because the project’s total production, revenue or estimated valuation cannot automatically be attributed entirely to Mkango shareholders. The company participates through its ownership interest rather than holding the whole United States operation outright.

Project financing could also influence the final economics. If significant new capital is introduced through additional equity or strategic investment, ownership percentages may change depending on the terms. Debt financing could preserve equity ownership but introduce borrowing costs, repayment obligations and other financial commitments.

Investors should therefore focus on the funding arrangements and attributable economics rather than applying the entire potential value of the Texas Hub to Mkango’s market capitalisation. This distinction becomes increasingly important as larger capital commitments are required to move from construction preparation into commercial operations.

What are the next milestones for Mkango’s Texas magnet manufacturing strategy?

The immediate development priorities are completion of permitting activities, contractor selection and progress toward establishing the initial finishing operation. Achieving the targeted first-half 2027 commissioning timetable would demonstrate that the company is beginning to translate its manufacturing plans into operational capability. The subsequent qualification of finished magnets with customers would provide a more direct indication of commercial progress.

The integrated Phase 1 facility presents a larger execution challenge because it introduces additional processing operations and production requirements. Investors will need updated information about capital expenditure, construction schedules, financing commitments and supply arrangements as the project advances toward its mid-2028 target. The timing and cost of the later Phase 2 expansion will require separate evaluation.

Mkango’s latest announcement removes an important infrastructure uncertainty and supports the development timetable for its United States rare-earth magnet strategy. However, power availability does not resolve the remaining questions surrounding financing, permitting, equipment installation, customer qualification and operating economics. The investment case will become more measurable as those outstanding milestones are converted into completed operational and commercial achievements.