Niron Magnetics, a Minneapolis startup company spun out of a University of Minnesota research lab, is planning to use $21.3 million in fresh capital from investors to build a magnet-producing factory in the state.

The location of the facility is still being finalized, company leaders said, but when completed, it will make magnets for use in electric vehicles, among other things.

Niron Magnetics produces permanent magnets for use in industrial motors, audio speakers, magnetic sensors, consumer appliances and wind turbines, without the use of rare earth metals, which can raise serious environmental hazards.

The company's technology instead uses iron and nitrogen, which it says are less expensive and more sustainable. The company also states its production process is 95% less damaging across certain environmental factors compared with alternative methods.

Rare earth magnets are mostly made of neodymium, and China controls 90% of the supply, according to Reuters, which also reports prices for neodymium oxide are up 90%. Nissan, BMW, Toyota and Volkswagen are among the car makers looking to cut back on the use of rare earth content in their motors.

The new funding round for Niron includes investment from the University of Minnesota, which already had a stake in the company; the Volvo Cars Tech fund, an investment unit of Swedish car maker; Washington, D.C. -based Anzu Partners; another existing investor; and Naperville, Ill.-based Volta Energy Technologies.

This past November, Niron Magnetics secured $5 million from the Department of Energy to develop permanent magnets for electric vehicle drivetrains in partnership with Marquette University and General Motors.

The new plant — which will be roughly 20,000 square feet and located in or within 20 miles of the Twin Cities metro area — is expected to be completed in early 2022. The company is working with government officials on permits and approvals for the construction of the facility.

"The demand for more sustainable vehicles, power generation and electronic devices should be met with innovation in the magnets that drive these technologies, rather than increasing the mining for rare earth materials," said Andy Blackburn, CEO of Niron Magnetics, in a statement.