It was April of 2025 and John Maslin was having a great week. His company, Vulcan Elements, had just opened a rare earth magnet factory in North Carolina. Under an American flag, he spoke of “onshoring one of the most important supply chains in the world”. The facility was set to be one of the few of its kind outside of Asia.

Maslin didn’t have long to celebrate. A few days later, the U.S. announced steep tariffs on China, which retaliated with duties of its own and export controls on seven rare earth elements. Jonah Glick-Unterman, the company’s chief of staff, woke up at 6 a.m. and scrambled to find someone who could translate the details of the restrictions from Chinese.

“It was a shock to the system,” says Maslin, Vulcan’s chief executive. “This is why we built this company,” he remembers thinking. “We need to go faster.” 

“There was just fire in everyone’s eyes,” Glick-Unterman adds.

China dominates the global supply chain for rare earths. In 2024 the country mined 59 percent and refined 91 percent of all rare earth elements, according to the International Energy Agency. It also manufactured 94 percent of rare earth magnets. 

Less than two months after Vulcan opened, a magnet shortage forced Ford to temporarily shutter a Chicago SUV factory. China then vastly expanded its controls last October to cover more rare earths as well as products containing them. It postponed the restrictions as part of a truce in which the U.S. agreed to delay its own expansion of a trade blacklist that would have affected 20,000 Chinese firms. 

American companies depend on rare earth magnets for a host of advanced technologies. A single Virginia-class submarine uses 9,200 pounds (4.6 tons) of rare earths, according to government estimates. Drones, robots, and many vehicle motors all include magnets made with rare earth elements.

China’s control over rare earths has given it the ability to “turn off the taps on American industry”, says Heidi Crebo-Rediker, a senior fellow at the Council on Foreign Relations. “Until we solve it, they have that chokehold.”

Washington has responded by directing billions of dollars to U.S. rare-earths projects, elevating Vulcan over the past year from a newly founded start-up (Maslin, 31, started it in 2023 while at Harvard Business School) to a test case for American industrial policy.

In November, the company announced that it would receive a $620 million loan from the Pentagon and had agreed to sell a $50 million equity stake to the Department of Commerce. As part of the arrangement, the company announced it would raise an additional $550 million from private investors.

This scale of funding for a company that did not exist five years ago reflects the enormous challenge the U.S. faces as it tries to break its dependence on China for magnets made with elements such as neodymium and dysprosium.

Because of rare earths, China now has a “systematic strategy to hit back against U.S. policy that harms Chinese interests”, says Cory Combs, head of critical mineral and supply chain research at advisory firm Trivium China. “This is a threat that’s more material than any the U.S. has faced from China in a long time, if ever.”

As a result, rare earths are now in vogue in Washington. The question is whether Vulcan and other magnet makers will be able to pull off a feat that has eluded companies outside Asia for the better part of three decades. 

A MANUFACTURED DEPENDENCY

It is an industry truism that rare earths, a group of 17 periodic table elements, are not rare at all. But separating them from each other and processing them into powerful magnets involves complex manufacturing and creates toxic waste. China, which is home to the world’s largest rare earth deposit, has been ahead of the competition for decades.

It was not always so. The U.S. produced more rare earth oxides than any other country until 1988, when China surpassed it, according to the U.S. Geological Survey. A consortium that included two Chinese companies led by relatives of China’s paramount leader Deng Xiaoping bought General Motors’s magnet unit, Magnequench, seven years later. Within a decade of the acquisition, China controlled most of the magnet industry too. 

“The U.S. had the magnet-making technology,” says Jim Engdahl, the former chief executive of Great Western Mineral Group, a now defunct rare earths company that was based in Saskatoon, Canada. “China bought it.”

American environmentalists were happy to see the industry move to the other side of the Pacific Ocean. Mining and processing rare earths releases radioactive materials as a byproduct: producing a ton of rare earths generates about a ton of radioactive waste. In Baotou, Inner Mongolia, the Chinese city closest to the country’s largest rare earths mine, state media has written that there is a cancer “epidemic” in the area.

The movement of the rare earths industry to China was also driven by Wall Street’s desire to reap efficiency gains from outsourcing, says Thomas Kruemmer, director of rare earths consultancy Ginger International Trade & Investment: “It is absolutely plainly wrong to say China stole it from us … In the 1990s and 2000s, if you did not have a low-cost country sourcing strategy, you would get butchered by the market.”

“The difference is scale,” Kruemmer adds. “Everything that you start in China immediately scales up to an enormous size.”

By 2010, scale had become leverage. That year China blocked rare earths exports to Japan during a bilateral dispute. The price of a kilogram of neodymium oxide rose nine-fold, from $27 per kilogram in 2008 to $244 three years later. While Chinese officials never publicly said they were deliberately targeting Tokyo, the incident underscored how dependent the world had become on China for rare earths. 

Jessica DiCarlo, a geographer at the University of Utah who studies China’s rare earths industry, calls the incident a “turning point”. 

“There was a recognition that rare earths are not just a domestic industry to build and scale, but they also carry significant foreign policy and geopolitical implications,” she says.

[China now has a] systematic strategy to hit back against U.S. policy that harms Chinese interests. This is a threat that’s more material than any the U.S. has faced from China in a long time, if ever.

Cory Combs, head of critical mineral and supply chain research at advisory firm Trivium China

The embargo got Washington’s partial attention: the House passed a bill to fund research on rare earths supply risks the same month that China and Japan began feuding, but it never advanced in the Senate. “We tried to drum it into people’s heads way back then, but nobody really listened,” says Gary Billingsley, who worked with Engdahl at Great Western. 

Not even California’s Mountain Pass, the largest rare earths mine in the U.S., got funding after the embargo, according to Rocky Smith, who was the mine’s managing director at the time. The U.S. should have “gotten the hint” then, he says, but the Obama administration was not receptive to the industry: “They didn’t support rare earths at all.”

One move that the Obama administration did take to secure rare earths supply backfired. In 2012, it brought a case before the World Trade Organization, arguing that China unfairly imposed export quotas, charging a lower price inside the country than it did for foreign buyers. Two years later the WTO ruled against Beijing, which scrapped the quotas. As a result, the price of neodymium oxide fell around 80 percent between 2011 and 2015, according to the U.S. Geological Survey.

American firms couldn’t compete when prices fell. Both Great Western and Smith’s firm, Molycorp, filed for bankruptcy in 2015.

China meanwhile consolidated its then fragmented rare earths industry into two state-owned conglomerates.

The move was driven by “environmental and efficiency concerns”, says Patrik Andersson, who studies Chinese critical minerals policy at the Swedish Institute of International Affairs, “but has also laid the groundwork in the past decade for China to be able to weaponize [its] dominance more effectively.”

SPENDING SPREE

As the Covid-19 pandemic snarled supply chains across the world, Washington began to wake up to its dependency on China for rare earths. Anthony Di Stasio, a former senior defense official who focused on critical minerals, says he arrived at the Pentagon in 2020 to a “five alarm fire”.

During the Biden administration’s first 100 days in office, the National Security Council conducted a review of supply chain risks. “The biggest shock was really on the critical minerals and rare earths side,” says the Council on Foreign Relations’ Crebo-Rediker. 

By March 2024, the Pentagon had directed more than $439 million towards the establishment of domestic rare earth supply chains. Tax credits and awards from other federal agencies brought the total to more than $600 million.

“We saw the rare earth challenge,” Jake Sullivan, Biden’s National Security Advisor, said in a recent interview with The Wire. “But we didn’t get the job done.

“It is patently clear that we did not move fast enough or ambitiously enough,” he added. “The Trump administration has taken some good steps now, but still isn’t moving with the alacrity or the ambition that is necessary.”

On his first day in office, Trump signed an executive order to establish the U.S. as a “leading producer and processor of non-fuel minerals, including rare earth minerals”. His signature One Big Beautiful Bill legislation unlocked $100 billion in loan financing for critical minerals projects and related industries. The administration later launched a $12 billion critical mineral stockpiling plan known as “Project Vault”.

So far it has signed off on $3.5 billion worth of loans and equity deals to fund six rare earths companies, more than five times what Biden allocated during his time in office. Half of them, including Vulcan, plan to make magnets with the rare earth element neodymium as well as iron and boron.

THE COMPANIES RIDING THE RARE EARTHS BOOM

COMPANY	GOVERNMENT BACKING	EQUITY STAKE
IMG USA Rare Earth	$1.6 billion	✓
IMG Vulcan Elements	$670 million	✓
IMG Serra Verde Group	$565 million	✓ (Option)
IMG MP Materials	$550 million	✓
IMG ReElement Technologies	$80 million	✓ (Warrants)
IMG UCore Rare Metals	$18.4 million

Note: Shows maximum announced government commitment under the Trump administration. Source: The companies

The Pentagon chose to prioritize NdFeB magnets (as they are known from their periodic table abbreviations) because of how many products they are in and China’s dominance of their manufacturing, says Di Stasio, who left the government in November. He says that as of then the Pentagon was on track to be “completely independent” from China for its NdFeB magnet supply chains by 2027, but achieving the same for heat-resistant samarium cobalt magnets, which are better suited for fighter jets and missiles, will take longer.

Ensuring supply for the commercial market will require more time, according to industry observers. Smith, who formerly ran Mountain Pass and later was chief executive of Australian miner Peak Rare Earths, estimates that the U.S. needs at least five to 10 years. “If this was a baseball game, I’d say we’re in the first inning.”

FROM THE NAVY TO MAGNET MAGNATE

Maslin, Vulcan’s CEO, didn’t expect to start a magnet company. After six years in the Navy, he entered Harvard’s MBA program in 2022 with the idea of becoming an investor in companies that made critical components such as semiconductors and batteries. While in the Navy, Maslin sourced critical minerals for the reactors on nuclear submarines.

But when it came to rare earths, “I couldn’t even count on one hand the number of companies that were really trying to do this outside of China in a real way,” Maslin says. So from his apartment in Cambridge, he decided to start one himself.

Maslin was then, through a classmate, introduced to Piotr Kulik, a magnet scientist at the University of Central Florida. Over happy hour at a bar in downtown Boston, Maslin and Kulik hashed out a plan to make rare earth magnets in the U.S. Kulik became a Vulcan co-founder and its chief technology officer.

Vulcan quickly got to work making samples of magnets and testing them at the Ames National Laboratory in Iowa. Chris Miller, the author of Chip War, and Nadia Schadlow, a top defense official in the first Trump administration, soon signed on as advisors.

At Vulcan’s factory in Durham, North Carolina, a reactor turns separated rare earth oxides into metal alloys. Machines then crush the alloys into powder particles less than one-tenth the width of human hair and compress them into magnetic blocks; bake the blocks in a specialized furnace; treat them with additives; and shape and coat them to customer specifications. 

Buyers of [American-made] magnets are going to have to pay a higher price. They can’t expect to pay Chinese prices from outside-of-China sources.

Gary Billingsley, a former Great Western executive

The company’s magnet press and strip caster — which melts metal alloys before pouring them on a spinning drum to freeze them into thin flakes — are each the “first or second made in the U.S. this century”, says Glick-Unterman. Maslin estimates that all of the equipment cost less than $10 million.

For each machine, Vulcan went through “every annex that you could possibly imagine, to trace where every piece was sourced, to ensure that none of it came from an entity of concern”, Glick-Unterman says. “The last thing we wanted was to have a piece of equipment that we couldn’t maintain because China wasn’t shipping out their copper wheels anymore for the strip caster, or they had decided to hold the magnet press in port for two years.”

Vulcan says it does not source any of the materials it uses to make magnets from China either.

As China’s export restrictions piled up, the plant, which can make 10 metric tons of magnets annually, had more orders than it could handle. 

The company had been briefing senior government officials since the Biden administration, signing contracts with every branch of the military and hitting its milestones on time, Glick-Unterman says.

That allowed Vulcan to capitalize when the Trump administration opened the government spigot last July, when it agreed to take a 15 percent stake in Mountain Pass-owner MP Materials.

Vulcan declined to share revenue figures. One long-time industry executive told The Wire China he estimates that a company with 10 metric tons of NdFeB magnet capacity could generate around $2 million in annual sales. 

In August, Vulcan announced that it had raised $65 million in a Series A funding round led by venture capital firm Altimeter Capital, with other investors including 1789 Capital — at which the president’s son Donald Trump Jr. is a partner. Vulcan’s valuation rose to more than $200 million, according to Pitchbook, a data provider. It initially planned to open a facility that could make one to two thousand metric tons of magnets a year, Maslin says.

Three months later, Vulcan announced its deal with the government. At the time, it was the largest loan disbursed by the Office of Strategic Capital, the wing of the Pentagon focused on critical minerals investments. Maslin declined to share Vulcan’s current valuation, saying only that it is a “step up” from its Series A benchmark.

Vulcan referred questions about the size of the government’s stake in the company to the Commerce Department, which did not respond to a request for comment.

The money will allow Vulcan to make ten times more magnets than it had planned in August — and 1,000 times what it can produce today. But its backing from 1789 Capital has led some observers to worry about conflicts of interest. In January, three Democratic senators sent a letterto Defense Secretary Pete Hegseth raising concerns about the Pentagon’s loans to Vulcan and other companies that the venture capital firm backed.

Maslin says he has never met Trump Jr. and that the company has not gotten any help from 1789 Capital in setting up government meetings.

Tom Clare, an attorney who represents 1789 Capital, said the VC firm learned about Vulcan’s government deal from media reports.

“1789 Capital not only had zero involvement with the government’s loan and equity transactions involving Vulcan, but it had zero knowledge any of these transactions were even contemplated,” he said in an email.

A spokesman for Trump Jr. said in an email that he “is a passive minority investor in Vulcan through 1789 and has zero involvement in their company beyond that.”

The Defense and Commerce Departments did not respond to requests for comment. Pentagon and Commerce officials have previously said Trump Jr. was not involved in the deal.

THE TAR HEEL STATE

After a nationwide site search for a new facility big enough for its ambitions, Vulcan landed less than 60 miles south of Durham in Johnston County, in the tiny town of Benson, North Carolina (population 4,500). It is planning a $918 million manufacturing center there that is “by far” the largest investment ever in Benson, according to Max Raynor, the mayor.

Vulcan will get something out of the deal too: Local officials voted to give the company up to $95 million in tax and other incentives if it invests $826 million over five years and hires at least 900 people on annual salaries of $73,109 or higher. The state could provide up to $25 million more in additional incentives. 

“We expect a lot of other companies will come to dovetail around [Vulcan],” Raynor, who is also an optometrist, said in an interview conducted in an examination room in his office. “Everybody’s excited about it.”

Last month Raynor printed customized T-shirts with the words “Mules, Moonshine and Magnets”, a nod to two things Benson has long been known for, and what he hopes will become a third. 

County economic development officials had been trying to lease the space Vulcan is taking for the better part of two years. At one point, a Chinese solar company visited the site. Raynor is happy Vulcan is leasing the plant instead. “We’re very proud,” he says. “We feel like we’re contributing to our nation’s defense.” 

Vulcan is hoping to grow from around 50 employees to several hundred by the end of the year. It is planning to start operations in Benson in the first quarter of next year after doubling the size of the factory to more than one million square feet — more than 17 football fields.

The expansion had not yet begun when The Wire visited the facility in February and its 347-space parking lot was empty.

CAN THEY DO IT?

A dearth of magnet scientists outside China is one of several obstacles that Vulcan will have to overcome if it is to reach its goals. 

When the Pentagon called Jack Lifton looking for rare earths experts in 2017, he knew exactly where they should go. Lifton, 85, first worked on purifying rare earths during the Kennedy administration. 

Whatever the next development is — and you are starting way behind the curve — you need to make that magnet.

Jim Herchenroeder, an engineer and former executive at Neo Magnequench

“I said, you can check out the cemeteries [and] assisted care homes,” recalled Lifton, co-chairman of the Critical Minerals Institute, an advisory group. “The biggest problem is that we don’t have enough people with experience.”

Executives in the rare earths industry say they have been able to find expertise in adjacent fields. Vulcan is hiring from the powder metal, aluminum, steel, battery and aerospace industries, as well as companies such as SpaceX and Tesla. 

Colorado-based Energy Fuels, which supplies Vulcan with rare earth oxides refined in Utah, found its experience in mining and processing uranium could be easily applied to rare earths, says Curtis Moore, one of its executives. 

“Early on we did hire some people with specific expertise in rare earths but very quickly we realized we knew as much or more than they did,” he adds. “We decided to just do it ourselves.”

There are more challenges: before companies begin processing rare earths outside China, analysts say that they must be prepared to deal with radioactive byproducts, such as uranium and thorium. “This is particularly nasty stuff that manages to poison people who live kilometers away,” says Kruemmer, the consultant. 

As a uranium miner, Energy Fuels knows how to handle radioactive materials, Moore says. The company discards waste in pits triple-lined with thick plastic and mesh that are built to 1,000-year regulatory standards. 

Vulcan also buys rare earth oxides from Indiana-based ReElement Technologies, which recycles rare earths from electronic waste.

Recycling rare earths from electronic waste is a way around the radioactivity problem entirely, says Julie Klinger, a professor at the University of Wisconsin–Madison and the author of Rare Earth Frontiers. “The radioactivity concerns, complexities [and] risks that we still collectively haven’t figured out how to deal with in a really satisfactory way: that’s just not present for recycling.”

Even if Vulcan can successfully reach its target capacity, it will enter a crowded market filled with new American companies, established Japanese competitors, and Chinese juggernauts that charge low prices, have strong customer relationships and are determined not to cede market share. 

“Buyers of [American-made] magnets are going to have to pay a higher price,” says Billingsley, the former Great Western executive. “They can’t expect to pay Chinese prices from outside-of-China sources.”

Companies will also have to please picky customers. For complex products such as engines, customers often want magnets designed to their own specifications, made by a supplier they trust. 

Newer makers of rare earth magnets also face the challenge of coming up with products that customers will want two to three years in the future without a well-established manufacturing process, says Jim Herchenroeder, an engineer and former executive at Neo Magnequench. “Whatever the next development is — and you are starting way behind the curve — you need to make that magnet.”

Vulcan is not the only magnet maker backed by loans and equity investments from Washington. MP Materials also says it is setting up a facility to make 10,000 metric tons of NdFeB magnets, as does USA Rare Earth.

If U.S. companies follow through on their announced commitments, America’s NdFeB magnet capacity will be near 40,000 metric tons. By Lifton’s estimates, American demand is less than half that. He thinks the U.S. needs 10,000 tons of NdFeB magnets for gasoline cars, 5,000 tons for electric vehicles, and 2,000 tons for defense.

THE MAGNET MAKERS

Companies that have announced production of NdFeB magnets.

COMPANY	PLANNED CAPACITY (metric tons/year)	LOCATION
IMG Vulcan Elements	10,000	Benson, NC
IMG MP Materials	10,000	Northlake, TX
IMG USA Rare Earth	10,000	Stillwater, OK
IMG JS Link America	3,000	Columbus, GA
IMG Noveon Magnetics	>2,000	San Marcos, TX
IMG e-VAC Magnetics	2,000	Sumter, SC
IMG HyProMag USA	750	Dallas-Fort Worth, TX

Note: Figures for USA Rare Earth, JS Link, and Noveon are in tons. Source: The companies

A 2022 study by the Department of Energy found that U.S. demand for NdFeB magnets in 2020 was 16,000 tons, and predicted demand would rise to 37,000 tons by 2030 assuming a “high-growth scenario”. (The department based its estimates on growth in the offshore wind and electric vehicle industries. Trump scrapped subsidies for both last year.)

“The current U.S. administration is basically killing half of the demand for NdFeB magnets,” Kruemmer says.

The Department of Energy did not respond to a request for comment. 

On its own, defense demand for NdFeB magnets is “insufficient to support an economically viable domestic industry”, a 2023 report by the Department of Commerce found. While it redacted the exact figure, Di Stasio, the former Pentagon official, estimates that defense demand is around two percent of the total U.S. market. 

Vulcan argues that older estimates fail to account for the rapid development of new technologies, such as robotics and the infrastructure used to power AI data centers. The company estimates that its target capacity of 10,000 tons is equivalent to about a quarter of the current U.S. market, which it expects to double over the next several years.

In a December report, Morgan Stanley projected that global demand for rare earth magnets will increase 477 times between 2025 and 2050 to reach 1.7 million metric tons, driven by the humanoid robot and autonomous vehicle industries.

Vulcan’s deal with the government does not contain any guaranteed purchase commitments. Maslin says Vulcan already has customer interest for “well beyond” the 10,000 metric ton capacity of the Benson facility. “We’re going to choose who we want to work with,” Glick-Unterman says. 

The company works with customers in defense, aerospace and “critical economic” sectors such as semiconductors and AI, he adds. Vulcan says it has signed nine Pentagon contracts but declined to name specific commercial customers.

Lifton, the veteran metallurgist, remains skeptical. “The actual demand is badly overestimated,” he says. Other critics say the United States is backing companies that are likely to fail. Kruemmer fears the Trump administration is “giving money to people who will burn it”.

“Even the most sophisticated investors are not consistently big winners,” counters Moshe Schwartz, senior fellow for acquisition policy at the National Defense Industrial Association, which represents defense contractors. “The government may not have a 90 percent success rate, but it doesn’t need to.”

“Some money will be wasted, but eventually it will get you to where you need to be,” adds David Merriman, research director at consultancy Project Blue.

The U.S. government’s previous neglect of the rare earths sector gives it no choice but to take risks. As long as China controls the industry, Beijing will be able to use it as leverage over the United States. As Combs at Trivium points out, “even if China undoes the export controls, it always has the option to bring them back”.

Maslin is confident Vulcan will help end what he sees as needing to “ask permission from China what we’re allowed to build and buy.” 

On a recent Sunday he received an alert from the factory’s security system around 1:30 a.m. and thought someone was breaking in. It was a Vulcan engineer who was too focused on work to sleep, ready to start the week before it had begun.

---