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The Trump administration and private investors are partnering with two rare earth startups in a $1.4 billion deal to expand the country’s access to materials and technology vital to the production of a range of high-tech goods and military equipment.
The investments in Vulcan Elements and ReElement Technologies are the latest stakes taken by the US in a handful of private companies – including another rare earth company and chipmaker. intel – since the President donald trump Started his second term in January. The White House has prioritized strengthening the country’s supply chain in a market dominated by China,
Vulcan Elements makes rare earth magnets, while ReElements processes rare earth mineral ores and recycles old batteries and other products made from rare earths.
Rare earths are used in fighter aircraft, guided missiles, drones and nuclear submarines as well as smartphones and wind turbines.
The cash infusion will allow Vulcan and ReElement to expand their annual magnet production to 10,000 tonnes a year, the companies said.
The Commerce Secretary said, “Our investment in Vulcan Elements will accelerate U.S. production of rare earth magnets for American manufacturers.” Howard Lutnick Said. “We are focused on bringing critical minerals and rare earth manufacturing back home, ensuring America’s supply chain is strong, secure and completely reliable.”
The deal announced this week comes just days after Trump met with the Chinese leader Xi Jinping and agreed to cut tariffs on China in exchange for Beijing allowing exports of rare earth elements.
Ahead of Xi and Trump’s meeting last week, China had imposed restrictions that would require foreign companies to seek special approval to export goods that contain even small amounts of rare earth elements sourced from China, even if those products are made by foreign companies elsewhere. However, it did not eliminate sanctions that were imposed in the spring after Trump imposed his initial round of tariffs.
China accounts for about 70% of the world’s rare earth mining and controls about 90% of global rare earth processing.
The deal includes a $620 million loan from the Department of Defense, a $50 million federal incentive from the Commerce Department and $550 million of private capital.
The Defense Department will receive warrants in both Vulcan and ReElement, with Commerce getting a $50 million equity stake in Vulcan.
In July, the Defense Department agreed to invest $400 million in shares of Las Vegas-based MP Materials, which runs the only US rare earth mine. The unusual direct investment in the company made the government the largest shareholder in MP Materials.
A week later, MP Materials announced a new $500 million deal with tech giant Apple to produce more powerful magnets used in iPhones as well as other high-tech products like electric vehicles.
US Steel, Lithium Americas and Trilogy Metals are among the companies in which the US government has taken equity stakes under Trump.
Those investments have been doubted by economists, former government officials and even members of the president’s own party.
Although it is not unprecedented for the government to provide financial support to businesses and industries, historically these investments usually come during major economic crises.