In a bid to expand production of rare earth magnets and reduce its reliance on China, Vulcan Elements, a U.S. rare earth magnet startup, announced that it has raised $65 million in a new round of financing. This investment signifies the increasing efforts by the United States to develop the rare earth magnet industry.
According to a report by The Wall Street Journal, Vulcan, based in North Carolina, received funding led by technology investment company Altimeter Capital, valuing the company at approximately $250 million.
Vulcan’s CEO John Maslin expressed concerns over China’s control of about 90% of the global rare earth magnet supply. Maslin emphasized the strategic importance of domestic production, saying, “A few years ago, when you talked about rare earth magnets, people would think you’re crazy. Now people truly understand the strategic importance of onshore production.”
The newly raised funds will be used to construct a large-scale factory capable of producing hundreds of metric tons of rare earth magnets per year in the next few years, increasing to several thousand metric tons by the end of the decade.
Prior to this latest round of financing, Vulcan had raised approximately $10 million in seed funding and established a pilot manufacturing plant in Durham, North Carolina in March, where it has already produced the first batch of magnets for military and commercial clients. Vulcan stated that all materials, equipment, and software used by the company are from the U.S. and its allies, with no imports from China.
The acquisition of rare earth minerals has been at the core of the U.S.-China trade war, as China has dominated global rare earth mining with about 70% of the global extraction and 90% of refining capacity.
During the peak of the U.S.-China trade tensions in April this year, Beijing began restricting exports of rare earth metals and related products, leading to challenges for American and global industries in accessing rare earth supplies for automobiles, electronics, and defense.
While some restrictions on rare earth magnet exports from China were lifted following trade negotiations, exports to defense industries remained limited. This has prompted the U.S. government to expedite actions to break China’s monopoly in the rare earth market and promote the development of the domestic rare earth industry to reduce dependence on China.
In an agreement announced on July 10th, the Pentagon agreed to acquire $400 million of preferred shares in MP Materials, making it the largest shareholder with a 15% stake in the company.
MP Materials owns the Mountain Pass rare earth mine in California, which is the only operational rare earth mine in the United States. The Pentagon’s investment will be utilized to expand MP’s rare earth processing capacity and magnet production.
With support from the Pentagon, MP Materials will also build a second magnet manufacturing plant named “10X” in the U.S. to serve defense and commercial clients. The plant is expected to be operational by 2028, with MP Materials’ rare earth magnet capacity reaching 10,000 metric tons, equivalent to the magnetic material consumption in the U.S. projected for 2024.
In April, President Trump signed an executive order to accelerate deep-sea mining permits for critical minerals and metals, promoting comprehensive development of deep-sea resources. The White House emphasized that this move is aimed at countering China’s control over rare earths and strategic minerals, strengthening America’s leading position in deep-sea technology, energy independence, and supply chain security.
The importance of rare earths cannot be overstated. They are vital materials for electronic manufacturing, defense equipment production, medical devices, and high-tech industries. Industries such as laser-guided weapons, advanced fighter jets, missiles, iPhones, electric vehicles, wind turbines, and nuclear power rely on rare earth elements.