I had the pleasure of interviewing Scott Dunn. Scott is the CEO of Urban Mining Company — a private US-based manufacturer of magnetic materials, products, and systems. Urban Mining is the developer of the patented Magnet-to-Magnet™ recycling process, for the cost-effective production of high-performance rare earth NdFeB magnets from end-of-life and scrap feedstocks. The founders started Urban Mining Company in 2014 and since then, the company has secured $25M in Series A financing.
Thank you so much for doing this with us! Can you tell us a story about what brought you to this specific career path?
We had a small recycling company and were suddenly being charged by our downstream for “contamination” in our materials — the contamination turned out to be a rare earth magnet. Around that time (~2010) there was a rare earth “crisis”, and an abrupt scarcity issue drove prices high — there was a major supply chain problem. It became clear to the world how “strategic” and “critical” rare earth elements were to important applications that fuel a high-tech, sustainable future. As recyclers, it was strange to us that there was no market or recovery value for rare earth elements, like there was for base metals such as iron or copper, etc; and we learned that not even 1% of rare earth elements were recycled globally.
What is the mission of your company? What problems are you aiming to solve?
Magnets are arguably the most important rare earth product in terms of consumption and functionality. Magnets are critical components in motor and generator applications for transportation/automotive, energy generation and conversion, even military and national defense…magnets enable high-performance, high-efficiency, and miniaturization of various systems used across so many sectors. Applications are growing by the day as society moves towards “electrification”. And there are no known commercial alternatives or substitutes.
Yet major market, geopolitical, and technological challenges threaten the price and availability of these essential components.
Urban Mining Company’s mission is to provide a high-performance, high-quality magnet product to its customers using abundant, alternative materials, while reducing the environmental impact of its own processes and by reducing the overall need to expand mining/manufacturing operations that support traditional magnet production.
Can you tell us about the initiatives that your company is taking to tackle climate change? Can you give an example for each?
By using our technology, we use roughly 90% less energy, while emitting 1100 kg less CO2 per ton of magnet:
Recycling — We recover waste magnetic materials from ‘end-of-life’ products and devices to support our magnet manufacturing process. For example, we recycle old hybrid electric vehicles or wind turbines that have reached the end of their useful life, and focus on recovery of the magnet component. This material feedstock supports our manufacturing operations where we can manufacture new, high-performance magnets for next generation electric vehicles and wind energy generation. We have shown that high-tech materials and manufacturing businesses can adopt a ‘circular economy’ or ‘closed-loop’ business model and actually increase their competitive advantage in the market.
Technology — All of our technology development is focused on performance and resource efficiency. We call our core capability ‘Magnet-to-Magnet™’ since we use waste magnetic materials as a direct input to our production process. We have completely eliminated the need to revert to any mining, melting, separating type processes that are incredibly stressful on the environment and energy intensive.
Smart Magnet Manufacturing — Our facility/production process combines machine and deep learning with control/automation to continuously observe, learn, and improve…which in turn reduces costs by maximizing process and product quality. Urban Mining’s new facility will be the most cutting-edge magnet manufacturing facility in terms of AI — learning something from every kilogram of magnet produced. The strategy is to combine massive data, software, and state-of-the-art equipment in a magnet factory that can learn, predict, and recommend corrections to maximize production yields, enhance product quality, mitigate safety risks, and minimize overall costs. To realize this vision, not only does each part of the magnet factory operation needs to be connected, but all the interconnected processes need to be co-optimized together.
What was the most difficult thing you faced when you first started your company/organization? Can you share how you overcame that. This might give insight to founders who face a similar situation.
At the start, we had risked quite a bit in our own careers and did not take any kind of compensation whatsoever…we couldn’t. Then, the challenge was in finding quality people and assembling the right team to commercialize and execute the project — including investors! We have been incredibly lucky to add the core team including investors that we have…
Our greatest challenge lies ahead in our customer base. By nature, aerospace and automotive organizations are very risk averse. They like to let you take on all the risk. And then, the amount of time and money required to prototype, test, and qualify new components, such as magnets, for integration into their products is very arduous — often called the ‘acquisition valley of death’. Lastly, they’re cutthroat on price. We’ve all been so bullish on our technology/solution because simply put it solves a serious supply chain problem while checking each and every ‘box’ — high performance, low cost, most advanced quality systems, shortest lead time, domestic, sustainable, design/engineering/r&d support, etc.
Many people want to start a company to tackle environmental issues, but they face challenges when it comes to raising enough money to actually make it happen. Can you share how were you able to raise the funding necessary to start your organization? Do you have any advice?
First of all, money is not hard to find — in fact money is desperate to be invested in a good idea. Second, good ideas are harder to find, however an idea does not make a good business. A good business plan is getting warmer; a good plan is a start. Now — execution, or what you can execute, is all that matters. For execution, you need the right people, you need the right team. The right people, the right team is rare. If you can demonstrate you have the right people, the right team, you will have more term sheets than you know what to do with.
Do you think entrepreneurs/businesses can do a better job than governments to solve the climate change and global warming issues? Please explain why or why not.
In the simplest sense, people will always do a better job than government, this isn’t even close. Our company is a perfect example of this.
I suppose you start with the question of what is the proper role of government in a free society; but then what’s unique about environmental issues is that the environment doesn’t have a voice. It is at least true that both need to work together more closely and faster. In our case, businesses across the supply chain need to do a better job of aligning goals and communicating them to the government. Especially when we talk about recycling and circular economy, the process of product design must be thought about all the way through end-of-life so disassembly can be more efficient and standardized. Both could work together to create the optimal incentive structures that influence behaviors that e.g., support and grow take back policy and producer responsibility because it’s just flat out simply better business (and companies like Urban Mining Company are proving this every day) and creating a forum in which businesses are incentivized to get together and come up with solutions that benefit the society and environment that we operate in… It needs to be a forum of “do-ers and decision-makers”.
What are some practical things that both people and governments can do help you address the climate change and global warming problem?
The most practical thing to do is to unleash innovation in all areas and to the greatest extent possible by removing barriers and obstacles and the like that increase all the costs of starting a business. New technology and rapid innovation is the only way to keep up with the speed of the problem, which fundamentally is a function of population.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
The Urban Mining team and its partners, all current and new. Thank you for investing your time and capital. Thank you for caring, listening, believing. Thank you for taking a risk of your own. Thank you for your support.
What are your “5 Things I Wish Someone Told Me Before I Started” and why. (Please share a story or example for each.)
1. Don’t just make the moral case — make the business case. Regarding a company specifically aimed at environmental problems/issues: if you can’t reconcile the moral case with the economic case then the idea and your business won’t work.
2. Don’t just solve a problem — meet a demand. The products our company manufacturers are not easy to secure, but we work hard to do so because we know that they are already in high demand for green and high-tech applications for tons of different uses — ranging from electric motors to wind turbines to and electric vehicles. Yes, we want to create a more sustainable planet, but our specific mission meets a real need: to create a high performance product in a market where price volatility and material supply threatens green technology development.
3. Listen — you will learn more about your customer and more about your business if you listen. The voice of the customer should be the basis of all actions taken by the business from inception to the end. And you hire quality people to tell you what to do, not the other way around.
4. Everything takes longer than you think it will — that applies to minutes in a day and days in a year (and sometimes the answer is not to throw bodies and money at it).
5. Choose your location wisely. Because of the nature of our company, access to talent is key. Which is why last year, Urban Mining Company announced San Marcos, Texas as the location of our new, state-of-the-art rare earth magnet manufacturing facility and headquarters — the only one of its kind. San Marcos offers a central location, available land and is home to Texas State University’s Material Science, Engineering, and Commercialization program. The 130,000 square foot facility is on 10 acres and will add more than 100 advanced manufacturing and technology jobs to San Marcos and Hays County — the heart of what’s known as the Texas Innovation Corridor.
You are a person of great influence and doing some great things for the world! If you could inspire a movement that would bring a great amount of good to the world, what would that be? You never know what your idea can trigger.
Look at something ubiquitous and ask — why isn’t this better? why hasn’t this changed? what’s stopping it? and how can this be done more sustainably? You may find yourself on to a very special idea. But remember, ideas are only the beginning. In the case of Urban Mining Company, we realized something so ubiquitous — like rare earth magnets — were being produced in an extremely unsustainable way, and not to mention the production was dominated by one country — China. We realized waste magnetic materials were actually “problems” or “costs” despite their intrinsic value. Our company aimed to redefine a vulnerable supply chain through technology that made economic use of a more sustainable, decentralized source for rare earth magnet production, that in turn power a high-tech, high-efficiency 21st century.