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US President Donald Trump and Chinese leader Xi Jinping talked about long-term co-operation during their summit last month, but despite the pomp and ceremony most of Washington and Beijing’s trade disputes remained unaddressed.
China’s critical minerals export restrictions are still a pressing issue. Beijing stepped up its weaponisation of the global supply chains it dominates after Washington introduced tariffs last year, in a move that shook US industry.
The critical materials, which include rare earth elements alongside other metals and minerals, are indispensable in magnets, high-tech hardware production and defence technologies.
Now the US is on a global hunt for the metals and building up its domestic sources to break China’s grip on the supply chain.
That is where Hertha Metals, a Houston-based technology start-up, comes in. Founded by MIT engineer Laureen Meroueh, the company has developed a way to produce high-purity iron needed in the magnets used in everything from electric vehicles to humanoid robots and Apple’s AirPod cases.
While the iron is not on the US critical minerals list, its production is also dominated by China.
Hertha is breaking ground on a 10,000-tonne-a-year commercial facility today on the outskirts of Houston to produce the metal. The company plans to produce the first steel-grade iron in the fourth quarter of next year and start producing the high-purity iron by 2028.
“There was clearly a wake-up call after the tariff war between the US and China,” said Meroueh, adding that there is a sense of “urgency”.
Meroueh, a 34-year-old who did her PhD in aluminium and her masters in high-temperature thermal batteries, started the company in 2022. Her processing technology uses natural gas to make high-purity iron from low-grade ore and fines.
The Hertha furnace makes iron or steel from ore in a single step. For magnet-grade iron, there’s one additional refining step in a vacuum furnace, which draws out dissolved gases, mainly oxygen.
The plant will be the first domestic commercial facility to make the iron for rare earth magnets. “It’s definitely an overlooked component,” Meroueh said about the iron, “but it’s a critical supply chain gap”.
“It’s often thought we can get this from a steel producer, but no, they are very far off from that specification,” she explained. “You’ll still be reliant on China if you do not find a [domestic] source of magnet-grade iron as well.”
In September, the company closed a $133.65mn Series A funding round, including a $65mn equity investment made through the Pentagon’s Industrial Base Analysis and Sustainment programme. The round was co-led by OpenAI backer Khosla Ventures and Doerr Capital, a firm led by American billionaire venture capitalist John Doerr.
The US government was playing a role to kick-start the rare earths supply chain after neglecting it for years, said Ashley Zumwalt-Forbes, a fellow at the Baker Institute. Otherwise, it is difficult to compete with China.
“Particularly when you have a monopoly that is state-backed, does not need to make money in order to continue operating and is actually seen as a long-term strategic asset of the state,” she said. “It’s exceptionally challenging to compete with that dynamic through the lens of western capital markets.”
Zumwalt-Forbes was speaking at the Annual Energy Summit, co-hosted with law firm Baker Botts and the Baker Institute’s Center for Energy Studies at Rice University in Houston this week.
She was speaking alongside Randall Atkins, chief executive of Ramaco Resources, a coal miner working to develop rare earth and other critical mineral operations at its exploratory Brook Mine in Wyoming.
“We’ve oriented our midstream operation to take advantage of a feedstock with a lot of mineral potential,” said Atkins, explaining the company is trying to isolate minerals important for the semiconductor industry, including gallium, germanium and high-purity aluminium.
Atkins compared the US rare earths shortage to the global diesel crunch the world is experiencing today — there is just not enough refining capacity.
“The midstream is where the main bottleneck is going to be in the United States,” he said. “Think how long it takes to build a refinery, and that’s basically what people are trying to start up. It’s a daunting task.”
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Energy Source is written by Jamie Smyth, Martha Muir, Alexandra White, Rachel Millard, Malcolm Moore and Stephanie Findlay with support from the FT’s global team of reporters. It is edited by Benjamin Wilhelm. Reach us at [email protected] and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.
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