The Trump administration is putting nearly $750 million towards a deal to produce rare earth magnets in the U.S. — and is once again taking shares of the companies to which it will dole out the cash.
The partnership between the Departments of Defense and Commerce, as well as Vulcan Elements and ReElement Technologies, seeks to enable 10,000 tonnes of magnet production in the U.S. each year.
Vulcan Elements said in a press release that it will be able to build and operate a 10,000 metric tonne magnet facility in the U.S.
Company Chief of Staff Jonah Glick-Unterman told The Hill in an email that the magnets in question can be used for virtually all electronic devices, including satellites, robotics, and drones to electric motors, hard disk drives and virtually all defense systems.
Under the deal, the military will provide Vulcan Elements with a $620 million loan from its Office of Strategic Capital, while an additional $50 million will come from the Department of Commerce under the CHIPS and Science Act.
The Office of Strategic Capital will also give ReElement Technologies an $80 billion loan to expand its recycling and processing operation.
The press release states that the Commerce Department will get $50 million worth of equity in Vulcan Elements while the Pentagon will get “warrants” in both Vulcan Elements and ReElement Technologies.
Stock warrants would give the government the right to purchase a stock at a certain price. It’s not entirely clear how big a stake in the companies the government will seek to take, and the Defense Department did not immediately respond to questions from The Hill.
The Trump administration has been focused on shoring up its supplies of minerals and particularly rare earth elements, seeking to use them in military applications in particular.
It has also sought to take a share of several companies it provides funding to, including in the minerals sector.
“Our investment in Vulcan Elements will accelerate U.S. production of rare earth magnets for American manufacturers,” said Commerce Howard Lutnick in a written statement.
“We are laser-focused on bringing critical mineral and rare earth manufacturing back home, ensuring America’s supply chain is strong, secure and perfectly reliable,” he added.
The magnets in question are neodymium iron boron magnets, with neodymium considered to be a rare earth element. Such minerals are not necessarily rare, but are often found in small deposits on the Earth’s surface and can therefore be uneconomic to mine.
In addition to the government funding, the deal will involve private capital, making the deal worth a total of $1.4 billion.
