On July 21, 2026, US electronics recycler ERI and Ontario-based rare earth recovery specialist Cyclic Materials announced a strategic partnership to build one of the largest rare earth recovery ecosystems in the United States. The deal targets a straightforward but persistently ignored supply-chain gap: the rare earth magnets sitting inside hundreds of millions of discarded electronics that currently flow into waste streams instead of back into manufacturing. For supply chain professionals, policymakers, and ESG teams tracking critical mineral resilience, the announcement signals that commercial-scale circular supply is moving from theory to infrastructure.
Introduction
Think about the last hard drive, EV motor, or pair of wireless earbuds that got thrown away. Each one contains rare earth magnets, small but essential components made from materials such as neodymium, dysprosium, and praseodymium. Those magnets are critical inputs for electric vehicles, wind turbines, defense systems, robotics, and AI hardware. And in almost every case, when the device is discarded, those materials disappear into a waste stream and are never recovered.
That loss is not trivial. Globally, less than one percent of rare earth elements are currently recycled. At the same time, China controls roughly 94 percent of permanent magnet production, according to the International Energy Agency. The combination creates a structural vulnerability that Western governments have spent the past two years scrambling to address through mining investment, stockpiling programs, and diplomatic frameworks.
The partnership announced on July 21, 2026, by ERI and Cyclic Materials approaches that vulnerability from a different direction. Rather than waiting for new mines to come online, which typically takes a decade or more, the two companies are betting that pulling rare earths out of electronics already in circulation can build a meaningful domestic supply faster, more cheaply, and with a significantly lower environmental footprint than primary extraction.
What the Partnership Actually Does
ERI, founded in 2002 and headquartered in Fresno, California, is one of the largest electronics recyclers in the United States. It operates eight certified facilities with the capacity to process more than a billion pounds of electronic waste annually, serving every zip code in the country. The company recycles more than one million pounds of electronic waste daily and runs its facilities on a fully carbon-neutral, zero-waste basis. It holds the highest available certifications for both data destruction and responsible recycling, including e-Stewards and NAID accreditation across all eight US sites.
Cyclic Materials, founded in 2021 and headquartered in Toronto, Ontario, has developed two proprietary processes for recovering rare earths from end-of-life products. Its MagCycle process separates magnets from devices such as EV motors and MRIs without destroying the value of the material in the process: it reduces waste volume by up to 98 percent and produces a high-grade magnet concentrate ready for further refining. Its REEPure hydrometallurgical process then dissolves that concentrate to isolate specific rare earth elements, producing high-purity mixed rare earth oxides that can be returned to magnet manufacturers as a direct substitute for virgin mining outputs. The company has secured $75 million USD in Series C funding and has already demonstrated both processes at commercial scale.
Under the new partnership, ERI will use its AI-driven hardware and software across its eight US facilities to identify, isolate, and pre-process magnet-containing components from the electronics it receives. The concentrated feedstock will then be shipped primarily to Cyclic Materials' spoke facility in Mesa, Arizona, which can handle up to 25,000 tons of end-of-life components annually, and onward to Cyclic's processing hubs. The companies have already begun conducting sample analysis to qualify products for the rare earth recycling process and have identified multiple high-volume product categories that will form the initial feedstock portfolio. Beyond rare earths, Cyclic's process will also recover copper and aluminum, adding further material value to what would otherwise be waste.
ERI Chairman and CEO John Shegerian framed the rationale simply: "For too long, end-of-life electronics have been viewed as waste when they're actually among the world's most valuable resources." Cyclic CEO Ahmad Ghahreman connected the commercial logic to the geopolitical context: "Together with John's team, we are creating a new supply of rare earths by unlocking materials already in circulation and recirculating them into the supply chain, which derisks foreign trade tensions, increases supply chain resilience, and strengthens national security."
The Supply Gap This Is Designed to Fill
To understand why this deal matters, it helps to understand the structure of the rare earth supply problem. Mining is only part of the picture. As I covered in "The Processing Gap Closes" in early July, the IEA has been clear that refining and downstream processing are the definitive bottleneck in Western supply chains, not ore in the ground. Rare earth elements exemplify this precisely: by 2035, announced mining projects outside the leading producer could deliver nearly 50,000 tonnes of capacity, yet planned refining and separation capacity sits under 40,000 tonnes, mainly in Malaysia and the United States. Downstream capacity for metals, alloys, and magnets is even tighter, at roughly 18,000 tonnes on a rare earth content basis.
The recycling pathway, if scaled, directly addresses the midstream and downstream gap by producing refined oxides that can feed straight into magnet manufacturing without requiring new primary refining infrastructure to be built from scratch. That is a meaningfully different value proposition from a new mining project.
The IEA's Global Critical Minerals Outlook 2026 adds further weight to the case. The report projects that secondary supply of key energy-transition minerals could roughly double its share of global demand by 2040, with average recycling rates climbing from about 10 percent today to close to 20 percent. For rare earth magnet recycling specifically, the IEA points to growing end-of-life volumes from early generations of EVs and wind turbines as the feedstock wave that will make commercial-scale recovery economically viable over the next decade. A single offshore wind turbine can contain up to five tonnes of magnets, with rare earths accounting for roughly 30 percent of that weight.
IDTechEx projects that rare earth magnet recycling will grow 6.5 times by 2036. The IEA calculates that recycling could reduce the need for primary rare earth supply by up to 35 percent by 2050. Scaling commercial partnerships like this one is how that projection becomes a physical reality rather than a modeled scenario.
Infrastructure Being Built: The South Carolina Campus and the Spoke-and-Hub Model
The ERI partnership does not exist in isolation. It feeds directly into a broader North American infrastructure buildout that Cyclic Materials is executing in parallel.
In January 2026, Cyclic Materials committed more than $82 million to establish a rare earth recycling campus in McBee, South Carolina, in Chesterfield County. The facility, Cyclic's second US site, will have initial processing capacity of 2,000 tonnes of magnet material per year, with a planned expansion to 6,000 tonnes. It is expected to produce 600 metric tons of recycled mixed rare earth oxides annually at launch, scaling to 1,800 metric tons, which the company says is equivalent to the rare earth content required for roughly six million hybrid vehicle transmissions per year. Operations are scheduled to begin in 2028. The project is expected to create 90 jobs and has received both state job development credits and a $500,000 grant to Chesterfield County for facility infrastructure costs.
The South Carolina campus also benefits from a pre-existing commercial anchor. In October 2025, Cyclic Materials finalized a ten-year exclusive agreement with Vacuumschmelze (VAC) to recycle all magnet production byproducts from VAC's new facility in Sumter, South Carolina. That agreement provides a guaranteed inbound feedstock stream from one of the most significant magnet manufacturing operations now being established in the United States.
The logic of the spoke-and-hub model that ERI and Cyclic are building together becomes clearer when seen in this context. ERI's eight facilities serve as pre-processing spokes, using AI-driven systems to sort and concentrate magnet-containing material from the enormous daily volume of electronics they receive. That material then flows to Cyclic's hub facilities, where the more capital-intensive hydrometallurgical processes can operate at the scale needed for economic viability. It is an infrastructure architecture designed to aggregate a diffuse feedstock into a concentrated, high-value supply stream.
Objections and Open Questions
The partnership has genuine strengths, but honest analysis requires acknowledging the uncertainties.
Scale is the central question. ERI processes enormous volumes of electronics, but rare earth magnets are a small fraction of the total weight of any given device. Separating, concentrating, and shipping that fraction in sufficient quantity to make refining economical is technically demanding even with AI-assisted sorting. The companies have begun qualifying product categories but have not disclosed the projected volume of rare earth oxide output the ERI partnership specifically will produce. Until those figures are available, the claim of "one of the largest rare earth recovery ecosystems in the US" is a forward-looking ambition rather than a demonstrated outcome.
Feedstock competition is another consideration worth watching. The IEA notes that manufacturing scrap currently accounts for the majority of secondary rare earth supply and is heavily concentrated in China, where most magnets are produced. As end-of-life volumes from EVs and wind turbines grow over the coming decade, demand for recycling feedstock will intensify globally. Multiple ventures, including ReElement Technologies (with whom ERI announced a separate partnership at end of 2025), Neo Performance Materials, Korea Zinc, Alta Resource Technologies, and the Mountain Pass recycling line cited in the IEA report, are all competing for access to similar material streams. Whether the feedstock available in the US market is sufficient to support all of these ventures simultaneously is an open question.
There is also the matter of end-market pricing. Recycled mixed rare earth oxides need to compete on price and purity with primary supply. Cyclic's process carries an estimated 63 percent lower carbon footprint and uses 95 percent less water compared to virgin mining, which creates differentiated value for buyers with sustainability obligations, particularly under frameworks like the EU's Critical Raw Materials Act, which includes rare earth recycled-content obligations phasing in between 2028 and 2032. But premium pricing from ESG-motivated buyers alone may not be sufficient to sustain margins if primary rare earth prices fall, as they have historically done during periods of Chinese supply expansion.
None of these concerns invalidate the strategic logic. They are, however, the variables that will determine whether this infrastructure scales as intended.
The Policy and Geopolitical Backdrop
The ERI-Cyclic deal is being launched into a policy environment that is, unusually for critical minerals, moving in the same direction as the commercial opportunity rather than against it.
As I covered in "Permanent Controls, Paper Insurance, and the Two-Tier Market" earlier this month, China's grip on rare earth supply chains has tightened through export licensing mechanisms even as a nominal truce has kept formal controls partially suspended until November 10, 2026. In June 2026, Beijing added MP Materials and USA Rare Earth to its export-control blacklist, targeting the two companies that have received the largest federal investments in US rare earth independence ($550 million and $1.6 billion, respectively). That action underscored the vulnerability of supply chains that depend on Chinese processing even when mining occurs domestically.
On the US policy side, Project Vault, announced February 2, 2026, committed $12 billion to establish a US Strategic Critical Minerals Reserve. The federal government has invested $10 billion in the critical minerals sector since January 2025, according to the Council on Foreign Relations. The White House executive order setting a January 2027 deadline for defense contractors to exit Chinese sourcing, which I examined in "The Compound Squeeze" in July, creates direct procurement incentives for exactly the kind of domestically processed rare earth oxides that the ERI-Cyclic partnership aims to produce.
Multilaterally, the Quad Critical Minerals Initiative Framework, announced May 26, 2026, at the Quad Foreign Ministers' Meeting in New Delhi, adds Australia, India, and Japan to a cooperative structure designed to diversify supply chains for rare earths and other critical minerals. That framework does not directly affect the ERI-Cyclic partnership, but it illustrates the degree to which recycling-based domestic supply is being pursued in parallel with diplomatic and mining-based strategies, rather than as a standalone solution.
What to Watch Next
The ERI-Cyclic partnership is a credible, well-structured commercial response to a documented supply-chain vulnerability. Both companies bring genuine capabilities: ERI's scale and logistics infrastructure, Cyclic's proven processing technology and growing hub network. The combination of a pre-qualified feedstock pipeline, an established anchor customer in VAC, a $82 million physical campus under development in South Carolina, and a favorable policy environment creates a more substantive foundation than most recycling announcements in this space.
The near-term milestones to track are straightforward. First, the volume figures: how much rare earth oxide does the ERI partnership contribute to Cyclic's processing pipeline annually, and how does that compare to the demand from Cyclic's existing customers? Second, the South Carolina campus timeline: construction is targeted for 2028 operations, but permitting, equipment procurement, and skilled workforce availability in Chesterfield County will determine whether that schedule holds. Third, the joint government procurement bids: ERI and Cyclic have stated they will pursue federal and commercial RFPs together for critical materials recovery. Any awards under the Defense Production Act or related programs would significantly accelerate the economics of the partnership.
Over the longer horizon, the question that both the IEA and the industry leave open is whether commercial recycling infrastructure will be mature enough to absorb the wave of end-of-life EV motors and wind turbine components the IEA expects to begin hitting the recycling stream by 2030. That is a short runway. The companies building processing capacity today are, in effect, placing a bet that the feedstock wave arrives on schedule and that policy frameworks in the US and EU create enough pricing support through recycled-content mandates and procurement preferences to make the economics work before primary supply recovers its competitive position. On current trends, that bet looks reasonable. But it is still a bet, and the next two years will tell us a great deal about whether the infrastructure is scaling fast enough to matter.