Cyclic Materials spins up a circular and secure supply chain for rare earths
ArcTern is passionate about investing in impactful companies spearheaded by incredible people. We love solutions that address a critical need at a crucial time and, in these moments, we know immense financial, environmental, and industrial value can be created.
Within the category of “critical needs at a crucial time” are rare earth elements — an increasingly scarce building block to a successful green transition. Demand for these materials is set to reach unprecedented highs over the next decade and, unfortunately, mining these materials is dirty, difficult, and in short supply. A fundamental imbalance is looming which threatens the world’s decarbonization goals as supply chains begin to struggle with increasing costs and material shortages. These elements are needed for things like electric vehicles and wind turbines but shortages threaten to stall deployments just as they’ve begun to gain the momentum they need. Cyclic Materials has a solution, and it feels like a simple one: reuse the old stuff.
Permanent Magnets will be a part of the next-gen economy
Rare earth elements are the key ingredient to high quality, permanent magnets. While these may seem like niche products, in reality, they’re anything but. Permanent magnets have been used for decades in things like speakers, vehicle components, industrial equipment like generators and compressors, and much more. They’re used to help save lives in MRI machines, and they help us to understand the universe in particle accelerators. They’re also the cornerstone of many of the technologies we need for the green transition: from the electric vehicles that move us to the wind turbines that power our grids. We’ve built electric vehicles and wind farms in droves already, which is encouraging, but the demand for them — and the rare earths that underpin them — is increasing. Fast.
We don’t have enough of them
Historically, there has only been one place to get rare earth elements reliably: from the ground. Unfortunately, this presents a number of problems. Mining is carbon-intensive, expensive, and challenging. Not only this, but there are only two commercially viable rare earth mines outside of China today. There are unmined deposits dotted around the globe, but it can take over a decade to get a mine operational and they are increasingly uneconomical. While on one end we have the physical constraint of raw materials, on the other end we have the political constraints of stable supply. The end-to-end supply chain for rare earths outside of China is incredibly small: China is responsible for 60% of the world’s rare earths production, nearly 90% of its processing, and effectively all of its heavy rare earths separation. Given an increasingly challenging political environment, industry leaders are investing meaningful time, effort, and money into stockpiling these critical minerals to ensure robust supply chains and continued infrastructure deployment. These compounding challenges are starting to squeeze markets but there exists no good solution to the emerging supply deficit — yet.
Cyclic Materials has an answer
Cyclic Materials has created a technology that can take old permanent magnets that contain rare earths, break them apart, pull out the needed metals, and insert them back into the supply chain. This may seem like a relatively simple recycling solution but underneath such a straightforward solution lies incredible technical and business complexity:
- Permanent magnets are magnets, and love to stick to each other and other metals making shredding, physical separation, and dismantling a headache;
- The feedstock that contains permanent magnets is incredibly diverse — they come in several sizes, from headphones to wind turbines, as well as from a variety of geographically disparate locations like scrapyards, dismantlers, Auto OEMs, etc. which makes it difficult to design a system that can source and ingest feedstock with consistency and reliability;
- The magnets themselves are not uniform and come in a variety of different chemistries and makeups, meaning any recycling process would also have to contend with a complex constellation of different metals, quantities, and concentrations.
Dealing with these challenges and producing a high-quality, economic stream of rare earths is no small feat and was, historically, infeasible. This complexity underpins why the recycling rate for rare earths is <1%… a stark contrast to other metals.
Creating a solution that can surmount those challenges in a way that is effective, scalable, and inexpensive requires immense talent. Luckily, Cyclic Materials has an incredible, purpose-built team to solve this issue. They have some of the most relevant experiences on earth including technical backgrounds, experience with recycling systems, sophisticated financial acumen, and much more. We’ve been truly impressed by the Cyclic Materials team, and firmly believe they are only at the beginning of their story. It will be a pleasure to join them as they scale this technology globally and make a genuine impact on climate change.
We are delighted to lead Cyclic Materials’ oversubscribed $53M Series B.
