The Strategic Investment Case for ReElement Technologies and Vulcan Elements in the Onshoring of Critical Rare Earth Magnet Supply Chains

The global race to secure rare earth magnet supply chains has entered a new phase, driven by national security imperatives and the urgent need to decarbonize industrial production. For investors, the intersection of geopolitical strategy and technological innovation presents a compelling opportunity in companies like ReElement Technologies and Vulcan Elements, which are at the forefront of onshoring efforts and closed-loop recycling. These firms are not only addressing the vulnerabilities of overreliance on China but also pioneering scalable solutions that align with the energy transition and circular economy principles.

The Geopolitical Imperative: Why Rare Earths Matter

China's dominance in rare earth element (REE) processing—over 90% of global capacity—has long been a strategic vulnerability for the U.S. and its allies. The Biden administration's $400 million investment in MP Materials, coupled with a 15% equity stake, underscores the federal government's commitment to building a domestic “mine-to-magnet” supply chain. This initiative, part of a broader $439 million Defense Production Act (DPA) funding package, aims to reduce exposure to Chinese export controls and ensure a steady supply of neodymium-iron-boron (NdFeB) magnets for defense and clean energy applications.

ReElement Technologies and Vulcan Elements are uniquely positioned to benefit from this paradigm shift. ReElement's hydrogen-based short-loop recycling technology, developed in collaboration with the University of Birmingham, offers a breakthrough in recovering high-purity rare earth materials from end-of-life magnets. Vulcan Elements, with its focus on advanced separation and refining, complements this by addressing the critical bottleneck in processing heavy rare earth elements (HREEs), which are essential for high-performance magnets in defense systems and wind turbines.

Commercial Scalability: The Rise of Closed-Loop Recycling

The global rare earth recycling market is projected to grow at a 7.0% CAGR, reaching $882 million by 2031. ReElement's partnership with Intelligent Lifecycle Solutions (ILS) to establish a 750-metric-ton-per-year recycling facility in Dallas–Fort Worth by 2027 is a testament to the commercial viability of closed-loop systems. This facility, which reduces embedded carbon by 88% compared to traditional methods, is expected to scale to 1,500 metric tons annually, creating a self-sustaining supply of NdFeB magnets.

Vulcan Elements' role in refining and separating HREEs further enhances the scalability of this ecosystem. By integrating with ReElement's recycled feedstock, Vulcan can produce low-carbon, high-performance magnets without relying on Chinese processing. This synergy not only reduces environmental impact but also aligns with corporate sustainability goals, as seen in partnerships with tech giants like Apple and Tesla, which are increasingly prioritizing recycled materials.

Strategic Partnerships and Policy Tailwinds

The success of ReElement and Vulcan is underpinned by strategic alliances and policy support. The DOD's 10-year offtake agreement with MP Materials, which includes a guaranteed price floor for NdPr oxide, sets a precedent for long-term demand certainty—a critical factor for capital-intensive projects. Similarly, ReElement's collaboration with ILS ensures a steady supply of end-of-life magnets, while Vulcan's partnerships with Australian and Saudi mining entities diversify raw material sources.

Government incentives, such as the Inflation Reduction Act's tax credits for clean energy technologies, further bolster the investment case. These policies create a favorable environment for companies that can demonstrate both technological innovation and alignment with national security objectives.

Investment Thesis: Balancing Risk and Reward

While the long-term outlook is promising, investors must weigh near-term challenges. Permitting delays, high capital expenditures, and the need for regulatory clarity remain hurdles. However, the strategic importance of rare earths in defense and energy infrastructure—coupled with the growing urgency to decarbonize—positions ReElement and Vulcan as essential players in a $1.0 billion global recycling market by 2030.

For risk-tolerant investors, ReElement's cutting-edge recycling technology and Vulcan's refining capabilities offer exposure to a sector poised for exponential growth. Diversifying holdings with these firms can hedge against geopolitical risks while capitalizing on the energy transition.

Conclusion: A New Era in Critical Minerals

The onshoring of rare earth magnet supply chains is no longer a theoretical goal but a strategic necessity. ReElement Technologies and Vulcan Elements exemplify how innovation and policy can converge to address both national security and commercial scalability. As the U.S. and its allies accelerate their efforts to reduce Chinese dominance, these companies stand to benefit from a structural shift in global supply chains. For investors, the time to act is now—before the next phase of industrial revival takes full shape.