Vulcan Elements Signs $1.4 Billion Agreement with the US Government and ReElement
The Department of Defense (DoD) has significantly increased its focus on securing critical minerals. On Monday, November 3rd, North Carolina-based startup. Vulcan Elements, a producer of rare-earth magnets, announced a $1.4 billion partnership with the Pentagon, the Department of Commerce, and ReElement Technologies to expand their vertically integrated supply chain for rare-earth magnets. This development follows Vulcan Elements recent $65 million Series A fundraising round in August, led by Altimeter Capital and One Investment Management, which valued the company at $250 million.
Under the $1.4 billion agreement, Vulcan will receive a $620 million direct loan from the DoD’s Office of Strategic Capital (OSC), $50 million in federal incentives via the Department of Commerce under the CHIPS and Science Act for the purchase of equipment for its production of domestic neodymium iron boron magnets, and $550 million in private capital to enhance its manufacturing capacity and strengthen its rare-earth magnet processing partnership with ReElement. The Department of Commerce will also acquire $50 million in equity in Vulcan Elements, reflecting a new trend of direct government ownership in critical minerals to counter China.
Separately, ReElement will receive an $80 million direct loan from the OSC to increase its recycling and processing capabilities, with this amount matched by private investment. OSC funding for both companies comes via the One Big Beautiful Bill Act, which provides up to $100 billion in OSC lending authority for critical minerals projects.
A significant portion of the funding will be allocated toward constructing and operating a 10,000-metric-ton magnet facility within the United States, with the specific location yet to be determined. In the interim, Vulcan plans to expand production at its current facility in 2026, with further scaling expected in a new facility to be announced in 2027. Collectively, Vulcan and ReElement aim to establish a closed-loop supply chain for rare-earth magnets.
ReElement specializes in converting end-of-life magnets, mined concentrates, and electronic waste into high-purity rare-earth oxides. Vulcan then reduces these oxides to manufacture finished rare-earth magnets. The companies entered into a commercial-scale agreement in August covering both “light” and “heavy” oxides essential for rare-earth magnet production. According to Vulcan CEO John Maslin, the expansion of this partnership represents a significant advancement in meeting rigorous industry specifications.
There are strategic motivations for the U.S. government’s strong support of Vulcan and other domestic rare-earth and critical mineral enterprises. China currently processes more than 90% of the world’s rare-earth elements, compared to approximately 1% in the United States. Rare-earth magnets, such as those made from neodymium iron boron (NdFeB), are crucial components in defense applications ranging from fighter jets to submarines and drones due to their superior magnetic strength, thermal stability, and miniaturization properties. Their importance as a foundational element in defense technology makes them a critical choke-point, especially given that an estimated 80,000 parts used in Department of Defense weapons systems depend on materials subject to Chinese export controls.
Investments in critical minerals have attracted substantial financial commitments of late. In October alone, the United States undertook several initiatives: it signed an agreement with Australia to finance over $1 billion in rare-earth and critical mineral projects across both nations, announced joint investments in critical minerals supply chains in Thailand and Malaysia, invested $43.4 million through the DoD in Nova Minerals for an antimony production facility in Alaska, and collaborated on a $1.8 billion investment with the Abu Dhabi sovereign wealth fund and Orion Resource Partners for mining and refining projects. In July, the DoD invested $400 million for a 15% stake in MP Materials, a rare-earth mining company based in Las Vegas, accompanied by a separate $150 million loan. The current environment continues to provide significant opportunities for U.S.-based rare-earth suppliers seeking to diversify and secure the supply chain away from Chinese dominance.