- Vulcan Elements, ReElement secure $1.4 billion to strengthen the U.S. rare-earth supply chain.
- Funding includes $620 million Defense loan, $50 million Commerce aid, and private investment.
- Deal boosts domestic magnet production amid China’s export limits and rising U.S. demand.
Two companies focused on manufacturing rare earth magnets have secured a $1.4 billion agreement with the U.S. government and private investors. The Wall Street Journal reported that this is the latest indication that the Trump administration aims to establish a domestic supply chain for rare earths, counter China's control in the industry, and is ready to invest significantly to achieve it.
Led by Vulcan Elements, the agreement features a $620 million loan from the Defense Department's Office of Strategic Capital to construct and manage a U.S. magnet facility designed to produce 10,000 metric tons of magnets annually, the company stated. The Commerce Department is providing $50 million, while private investors are contributing an additional $550 million.
Rare-earth magnets play a crucial role in creating motors required for artificial intelligence data centers, electric vehicles, and consumer electronics, in addition to their use in missiles, drones, satellites, ships, fighter jets, and various defense systems. China has historically controlled the supply chain from extraction to processing.
The agreement additionally encompasses ReElement Technologies, a firm focused on purifying and recycling rare-earth materials, aiding in the recycling of discarded magnets and enhancing local production. ReElement has obtained $160 million from the Office of Strategic Capital and Private Equity.
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In return for the funding, Vulcan, based in Raleigh, North Carolina, stated that the Commerce Department will obtain $50 million of its own funds. It's the government's newest effort to invest in private firms developing technologies that President Trump has emphasized.
The agreement signifies a significant enhancement for the recently established Vulcan Elements, headed by ex-Navy officer John Maslin, which launched its first commercial manufacturing plant in March. This summer, the firm revealed a $65 million venture capital funding round.
The magnet production of the startup has seen a surge in demand since China implemented export limitations on rare earths and vital minerals important for U.S. manufacturing and defense, which are hard or unfeasible to obtain from other sources.