BMW and Yamaha Motor have invested in Phoenix Tailings, a U.S.-based startup focused on sustainable rare earths processing, as part of efforts by manufacturers to reduce reliance on China for strategic metals, as reported by several news agencies. Rare earth elements, a group of 17 critical metals, are essential for making magnets used in electric vehicles, cell phones, and other electronics. However, the traditional refining method, solvent extraction, is costly and environmentally damaging, which led to its decline in the U.S. after its introduction in the 1950s. Meanwhile, China has spent decades refining this process, securing a dominant position in the global supply chain. Recent Chinese export restrictions have intensified Western efforts to develop alternative technologies.

Phoenix Tailings claims its innovative process can extract rare earths from both mined ore and recycled equipment with minimal to no emissions, positioning the company as a cleaner, more sustainable alternative. The startup recently closed a $43 million Series B funding round on December 20, with investments from BMW and Yamaha’s venture capital arms, as well as venture funds such as Envisioning Partners, MPower, and Escape Velocity.

The funds will support the construction of a $13 million facility in Exeter, New Hampshire, which is expected to produce 200 metric tons of rare earths annually by June 2025. Additional funding will be allocated to research, engineering, and business development. Phoenix, headquartered in Massachusetts and employing 33 staff, has already secured supply contracts valued at over $100 million, though it has not disclosed its partners. Success with the Exeter facility could pave the way for larger processing plants across the U.S., aligning with the company’s goal of going public within three to five years.

In contrast to major players like MP Materials and Lynas Rare Earths, which have faced challenges competing with Chinese producers, Phoenix benefits from not operating its own mines. This allows the company to focus on refining and sustainability. It is also pursuing U.S. government loans and grants to bolster its efforts.

The startup previously raised $10 million in a Series A funding round in August 2021. Industry observers suggest the current administration’s emphasis on onshoring manufacturing and critical minerals production could provide significant support for companies like Phoenix Tailings as they strive to enhance U.S. self-sufficiency in the rare earths market.