A Long Beach startup, founded by two Massachusetts Institute of Technology alumni, believes it has cracked a problem the Pentagon is racing to solve: processing rare earths cleanly on U.S. soil before Washington cuts off major overseas supply chains in January 2027.
Maglut Heavy Industries Inc., which came out of stealth mode Aug. 26, aimed to capture the blank space with chromatography – a technology that biotech companies use to pull specific molecules, like therapeutic proteins, out of complex biological mixtures like cell structures. Using proprietary resins and a water-based platform, Maglut is repurposing the technology for rare-earth separation.
Founders Curtis Wu and Azhar Yerzhanova – a husband-and-wife team – said that their new ARC-1 system has been validated at pilot scale, where it successfully extracted individual rare-earth oxides from raw feedstocks at over 99.9% purity. Chromatography utilizes the different speeds of elements as they pass through a stationary substance, which results in automatic separation of highly refined materials.
“Our technology is much cleaner than the industry-standard solvent extraction,” Wu said. “We don’t want to just bring back what we offshored before … we want to reimagine how things are done in this era.”
“Reindustrialization” is a keyword for the duo, who told the Business Journal that they imagine “lab coats” and atom manipulation instead of the traditional impression of “hands covered in coal” for the heavy industry sector. The U.S. has offshored the rare-earth processing technology to avoid negative environmental impacts, but with the federal push towards U.S.-made products, the two realized there was an opportunity to provide something that balances clean energy with efficient domestic production.
The city of Long Beach, with its reputation as the “Space Beach” that hosts major aerospace and defense juggernauts, provides an ideal place to start, the duo said.
“We certainly have an entrepreneurial and an innovative spirit here in the city of Long Beach,” Long Beach Mayor Rex Richardson told the team during the company’s official launch event. “We are honored to share this moment with you, and we’re going to root for you and walk alongside you the entire way.”
A comeback story
Rare earths are critical in supporting technological innovations and manufacturing, but the industry no longer has a substantial U.S. presence,
The 17 elements in the middle of the periodic table each have a unique function, and their fluorescent, conductive and magnetic properties help build the foundation of industrialization when alloyed with common metals such as iron, according to The Science History Institute.
From smartphones to precision strike missiles, rare earths are everywhere in modern life, yet their processing power has been waning in the U.S. since the 1990s. The initial dominance from the mid-1960s, using materials from California’s Mountain Pass mine, was overtaken by China as domestic environmental outcries and regulatory pressures ramped up, according to Geopolitical Monitor. Rapid industrialization, cheaper prices and a governmental push behind major corporations in China resulted in a near-monopoly of the resource, with China controlling about 90% of the global supply.
The market made its choices. The Mountain Pass mine paused full production in 2002. Other rare-earth companies down the supply chain, including the Indiana-based magnet manufacturer Magnequench Inc., merged with foreign conglomerates and saw dwindling operations, the report said.
Ali Javaheri, senior emerging technology research analyst at PitchBook Data Inc., said that the ability to refine the material at a large scale determines the attractive price. The U.S. is in a race to scale domestic production capacity and win the tug-of-war with affordable products – two objectives that complement each other.
“When it comes to where the actual bottlenecks from the industry are, it’s not really the mine,” Javaheri said. “It’s this ability to separate rare earth metals to refine them and then make the magnets, and that’s where the U.S. is short.”
The administration is aware, and it is trying to build a stockpile, Javaheri said. Las Vegas-based MP Materials Corp. received a massive investment from the U.S. Department of Defense last July to secure the domestic rare-earth supply chain, which involved a $400 million equity investment for a 15% stake, a $150 million loan, a $110 per kilogram price floor and a 10-year offtake purchase agreement.
USA Rare Earth Inc., hailing from Oklahoma, also received a $1.6 billion funding package from the U.S. Department of Commerce. The Pentagon also set a deadline by Jan. 1, 2027, to stop commercial companies from buying rare-earth materials and products from China, Russia, North Korea and Iran.
Other sources, such as venture capital, might also find opportunity in the space, Javaheri added. Not the mines, since they were too capital-intensive, but other business opportunities in related sectors, such as recycling, abound.
“There’s definitely going to be increased indigenization of the midstream layer of rare earths,” Javaheri said. “Things like recycling, separation technology and manufacturing magnets could suit venture capital.”
However, that seems to be a long and winding road. Reuters reported in July that the industry is not keeping up with the demand, despite the push from the federal government. Major mineral suppliers said they could not readily curb purchases of rare-earth materials from the named countries ahead of the Pentagon’s deadline, according to the report. Arthur D. Little data from the report shows a demand for neodymium-iron-boron magnets at nearly 48,000 tonnes last year. Domestic supplies sat at only 300 tonnes.
“It’s going to take many more years to get the needed infrastructure in the ground to compete,” Chris Berry, an industry analyst, told Reuters.
For Maglut, which solves the environmental problem with resin beads that grab rare earths out of water solutions instead of using highly polluting solvents, the challenge would be to scale for commercial success. The raw materials, they said, would be sourced from all over the world, but the production would be done here. The prices of imported rare-earth products are artificially raised due to tariffs and other restrictions, Javaheri pointed out. Now, it may be the time to swoop in and recapture a long-lost, yet massive, market.
“It’s not a saturated space,” he said. “(Startups like Maglut) do have the potential of carving out their own position in this industry.”
Taking baby steps
Wu and Yerzhanova – new parents as well as founders – said they recognized the long way ahead. Since the idea emerged from Wu’s work at the biologics purification department at Amgen Inc., the duo has been quietly developing their ideas and pitching to venture capitalists, who are now backing the startup. They also set their sights on a future where their system is the default rare-earth processor, Yerzhanova said.
Though there is an emphasis on defense from the federal government, the company is also targeting the dual-use market for commercial partners. The duo said they would monetize the processed oxides from day one. Right now, the priority is to generate enough revenue and attract enough capital to boost their platform to the next stage.
“When we landed on ‘Maglut’ (as a name), it really is a portmanteau for magnets and lutetium. Lutetium being the heaviest of the rare earths,” Yerzhanova said. “To us, separating the heavies is one of the coolest things to do.”
