（Singapore, 20.03.2026）A little known startup in North Carolina has quickly moved to the center of a major shift in US industrial policy, drawing growing political attention and debate.
Vulcan Elements, a three year old company focused on producing rare earth magnets, has attracted significant backing from both US taxpayers and private investors, including a venture capital firm linked to Donald Trump Jr. The combined funding is rapidly transforming the company from a small startup into a potential cornerstone of America’s effort to reduce reliance on China for critical materials, according to a Bloomberg report.
At the heart of the story is a broader debate over how far governments should go in directly investing in private companies, highlighting growing questions around the role of public capital in shaping strategic industries.
America’s Strategic Bet on Rare Earths and a Startup’s Growth
Rare-earth magnets may not be visible in everyday life, but they are essential to modern technology. They are used in everything from smartphones and electric vehicles to wind turbines, satellites, and advanced weapons systems.
Despite their importance, the global supply chain is heavily dominated by China, particularly in the refining process that turns raw materials into usable components. In 2024, China accounted for roughly 91% of refined rare-earth elements used in magnets.
This dominance has raised alarms in Washington, especially after China tightened export controls last year. Policymakers across party lines now agree that the US needs to build its own supply chain.
That’s where Vulcan Elements comes in.
The company plans to build what could become the largest rare-earth magnet factory outside China, in central North Carolina. If successful, it would mark a major step toward reshoring a critical industry tied to both economic competitiveness and national security.
Vulcan’s rise accelerated dramatically in 2025, thanks to two major developments.
First, the company raised $65 million in a funding round led by several venture capital firms. Among them was 1789 Capital, an investment firm whose partners include Donald Trump Jr. The fund focuses on what it calls “patriotic” investments, referring to companies aligned with US industrial and technological priorities.
Then, just a few months later, the US government stepped in.
Through a combination of programs, the federal government offered Vulcan more than $600 million in support. This includes a large loan from the Department of Defense and a $50 million equity stake from the Department of Commerce.
The impact was immediate.
When 1789 Capital first invested, Vulcan was valued at around $200 million. By early 2026, some investors were discussing a valuation close to $2 billion in a new funding round, marking a tenfold increase in less than a year.
The company had already secured smaller defense contracts since 2024, but the new funding pushed it into a completely different league.
The planned factory will be built in Benson, a small town of fewer than 5,000 people in Johnston County, North Carolina.
What began as a modest proposal for around 100 jobs has grown into a project worth more than $900 million, with the potential to create up to 1,000 positions. Local officials say the development could reshape the region’s economy for decades.
The site itself, a massive logistics facility spanning over 500,000 square feet, will require significant infrastructure upgrades, including substantial power capacity.
For local leaders, the opportunity is transformative. The project is expected to generate billions of dollars in economic impact over the next decade, bringing new industries and investment into the area.
Vulcan’s CEO, John Maslin, is not a typical industrial executive. A former member of the US Navy’s Nuclear Propulsion Program, he later attended Harvard Business School, where he developed the idea for the company.
Maslin has described rare-earth magnets as the “spine” of modern technology, less visible than semiconductors or batteries but just as essential. His early efforts drew attention from national security officials even before the company had raised significant funding.
Debate Intensifies Over Government as Investor
Despite broad support for strengthening domestic supply chains, Vulcan’s funding has sparked controversy.
Critics, including some Republicans, are uneasy about the government taking equity stakes in private companies. Traditionally, such interventions were reserved for crises such as the 2008 financial meltdown, rather than for long-term industrial strategy.
Some have gone further, raising concerns about the overlap between public funding and private investment linked to the president’s family.
There is no evidence of coordination between the government’s decision and 1789 Capital’s investment. Both the company and Trump Jr.’s representatives have stated clearly that there was no communication or involvement in securing federal support.
Still, the optics have fueled debate.
Economists and policy experts have used terms like “state capitalism” and “venture socialism” to describe the approach. They warn that government ownership could distort markets, create conflicts of interest, or lead to inefficient allocation of resources.
Others point to past failures, such as the collapse of solar company Solyndra, which cost taxpayers more than $500 million after receiving federal support.
Supporters, however, argue that the world has changed and that the US must adapt.
In industries tied to national security, they say, relying purely on market forces is no longer enough. Strategic competitors like China have long used state-backed investment to build dominance in key sectors.
From this perspective, government investment is not a distortion, but a necessary tool. Some investors in the defense and technology sectors welcome the shift, arguing that it gives smaller companies a fair chance to compete in critical industries.
The Vulcan deal also builds on earlier efforts, such as the CHIPS Act, which used subsidies and incentives to boost domestic semiconductor production. But it goes a step further by making the government a direct shareholder.
Vulcan Elements is still in its early stages and much depends on execution. Building a large-scale magnet manufacturing facility is complex, requiring not only capital but also technical expertise and reliable access to raw materials.
Broader uncertainties still remain, including whether government-backed companies will outperform or crowd out private competitors, how easily the government can exit these investments in the future, and whether this model could expand into other industries.
For now, the focus in North Carolina is on the immediate opportunity. Local officials are working to deliver on promises tied to jobs, infrastructure, and economic growth, while politicians from both parties highlight the project’s potential benefits.
Vulcan has quickly become more than just a startup. It is now a test case for a new era of US industrial policy, where government and private capital work side by side to rebuild strategic industries.
If successful, it could help reduce America’s dependence on China and strengthen its position in critical technologies. If it fails, it may reinforce long-standing skepticism about government intervention.
Either way, the outcome will likely shape how the US approaches industrial strategy for years to come.
