At the moment, manufacturing is outsourced but demand from aerospace engine makers for the tools has prompted Haydale to expand.
The facility will be funded by asset-backed lending.
US ceramics arm HCT is scheduled to deliver US$0.9mln of product in June to cutting tools makers, which add it to aluminium oxide to toughen the metal.
Haydale added that HCT has also started to ship small quantities of silicon carbide-micro fibres (SiC) as an anti-corrosive paint additive.
Ray Gibbs, Haydale’s chief executive, HCT s targeting paint makers and oil and gas companies in the anti-rust powder coatings market.
Sales to one paint maker have amounted to more than US$200,000 over the past six months and HCT has stepped up its product run.
HCT's SiC micro-fibre is also undergoing evaluation with a multi-national oil and gas major to enhance petrol production.
Both of these developments are at an early stage, Haydale added.
Gibbs said: "The lead times to grow the ceramic customer base demanded that we widened our portfolio in what was initially a relatively restricted market.
“The new range of SiC uses in anti-corrosion and coatings for the oil and gas industry has started to grow the company's product sales and introduced Haydale to additional markets.”