Texas startup raises $133M to build rare earth magnet-grade iron plant

Hertha Metals has successfully raised $133.65 million in a Series A round of funding for its new enterprise, Hertha Chalyx. The funds were secured through a $65 million equity investment from the U.S. government, executed under the Industrial Base Analysis and Sustainment (IBAS) program in collaboration with the Economic Defense Unit.

The round was jointly led by Khosla Ventures and Doerr Capital, with additional participation from Khosla Ventures, Doerr Capital, CEV, Pear Ventures, Gates Frontier, Niterra, Toyota Ventures, and Siemens Financial Services.

The primary objective of the funding is to finance the construction of Hertha Chalyx, a facility designed to produce 10,000 tonnes of magnet-grade and steel-grade high-purity iron annually. Hertha Metals is pioneering a novel process called FLEXHERS, which integrates electric arc furnace technology with either natural gas or hydrogen to generate iron and steel.

The Chalyx plant, along with Hertha's existing pilot plant, Pi100, will form the world's first modern iron and steel innovation complex, a crucial step towards reshoring iron and steel production, as highlighted by the company.

The United States presently relies on imports for nearly all of its high-purity iron used in rare-earth permanent magnets, with NdFeB magnets comprising approximately 70% high-purity iron by weight. Notably, the U.S. lacks domestic production capacity for this essential material. However, Hertha Chalyx aims to address this gap by establishing domestic production of high-purity iron, thereby creating a comprehensive supply chain from mining to manufacturing within the country.

This strategy is expected to reduce production costs by 25% and emissions by up to 98% compared to traditional blast furnace methods.

Hertha Metals CEO Laureen Meroueh emphasized the significance of Hertha Chalyx in closing the supply chain gap, stating that the facility will supply a domestic, cost-competitive source of iron and magnet feedstock for manufacturers. Khosla Ventures partner Rajesh Swaminathan echoed this sentiment, praising Hertha for developing iron and steel in a single step at a lower cost than conventional blast furnaces and producing these materials domestically.

Hertha currently operates a 360-ton-per-year demonstration facility in Conroe, Texas and is in the process of qualifying as a supplier for major U.S. rare-earth magnet producers.