Massive Funding for Domestic Rare Earth Magnet Production
Vulcan Elements, a start-up with a team of 30 employees, has been awarded a significant $620 million loan from the U.S. Department of War. This substantial funding comes just three months after 1789 Capital, a venture capital firm co-founded by Donald Trump Jr., invested in the company. The loan is part of a larger $1.4 billion initiative focused on bolstering domestic production of rare earth magnets, in collaboration with ReElement Technologies.
This transaction, finalized last month, represents the largest financing ever issued by the Pentagon’s Office of Strategic Capital. It also marks the latest in a series of federal contracts that have quietly been awarded to companies backed by Don Trump Jr.'s investment fund, which manages over $1 billion.
Vulcan will partner with ReElement to manufacture magnets essential for various defense applications, including weapons systems, aircraft, satellites, drones, and submarines. The comprehensive funding package also includes over $550 million in private investment and additional federal support. The Commerce Department will acquire a $50 million equity stake, and the Pentagon will receive warrants for both Vulcan and ReElement.
Trump-Linked Venture Firm's Growing Federal Contract Success
1789 Capital, where Donald Trump Jr. has been a key figure since 2024, participated in Vulcan's $65 million Series A funding round in August. This round was led by Altimeter Capital, and 1789 co-founder Chris Buskirk indicated the firm's intention to join subsequent funding rounds. Established in 2023 by Republican donors Omeed Malik and Rebekah Mercer, 1789 Capital now oversees more than $1 billion in assets.
Since Donald Trump Jr.'s involvement, 1789 Capital has invested in 22 companies, with five of these investments occurring in 2023 and 2024 alone. At least four of 1789's portfolio companies have received federal contracts from the Trump administration this year, collectively totaling over $735 million. Additionally, some companies have benefited from relaxed federal regulations.
1789 Capital also holds stakes in prominent companies such as Anduril and SpaceX, both of which continue to secure significant government contracts. The firm has expanded its investment strategy beyond its initial focus on anti-“woke” initiatives, now targeting firms that stand to benefit from potential second-term policies of Donald Trump, including the cryptocurrency sector, where the Trump family has reportedly seen substantial financial gains.
Among 1789's portfolio companies that have secured defense deals are Cerebras Systems, which received a $45 million agreement with the Pentagon, and PsiQuantum and Firehawk Aerospace, each of which obtained over $10 million from the U.S. Air Force. In October, Unusual Machines, in which Donald Trump Jr. held a multi-million-dollar stake, secured its largest contract to date from the Pentagon. However, Vulcan's new $620 million award significantly surpasses these previous figures.
Loan Deal Rekindles Questions of Influence and Access
The Pentagon has stated that Donald Trump Jr.'s connection to Vulcan played no part in the loan approval process. A spokesperson asserted that Donald Trump Jr. and 1789 Capital were "not involved in any aspect" of the negotiation. Officials from the Commerce Department and Vulcan echoed these statements.
A representative for Donald Trump Jr. reportedly informed the Financial Times that he had "no involvement in negotiations" with the government for any of 1789's portfolio companies. Despite these assurances, the situation has drawn scrutiny.
Kedric Payne, general counsel at the Campaign Legal Center, commented on the matter, stating, "Presidents are expected to avoid even the appearance that they are using their office to financially benefit themselves or their family. While we do not know for certain if, or how, the president may have influenced this loan, it falls under the cloud of conflicts of interest we have seen throughout this administration."
The timing and magnitude of Vulcan's substantial funding have intensified these concerns. Donald Trump Jr. had previously indicated in February his significant involvement in the strategic decisions regarding investment allocation at 1789. Furthermore, the Trump sons have been actively investing in ventures that align with their father's regulatory agenda, including cryptocurrency firms that have experienced growth following the easing of digital currency rules during his second term.
Concurrently, the Trump Organization, now managed by Donald Trump Jr. and his brother Eric Trump, continues to pursue real estate ventures globally. Last month, shortly before Saudi Crown Prince Mohammed bin Salman's visit to the White House, the Trump family announced a partnership with a Saudi firm for the development of a luxury resort in the Maldives. Eric Trump stated that their father "has nothing to do" with their business ventures.
At Vulcan Elements, CEO John Maslin informed the Financial Times that the company plans to expand its workforce to 50 employees by the end of the year. He emphasized the company's objective to establish a dependable supply chain for magnets to support the U.S. military.
"Every ship, every submarine, every tank, every missile, every aircraft, every drone, every satellite — every piece of hardware that moves uses a rare earth magnet," John Maslin explained.
Maslin further affirmed that there has been "zero contact with the president’s son," noting that 1789's stake in Vulcan is small and does not include board or observer rights. He concluded by stating, "This was not about political favors. This was purely a merit-based process."