# Vulcan Elements wins US Army drone permanent magnet contract
*The award supplies neodymium-iron-boron magnets for motors in the SkyFoundry program, which targets one million small unmanned aircraft annually while removing Chinese inputs.*
**Published:** September 30, 2026
**By:** Mina Okoro
**Section:** Shipbuilding & Defense — Cross-border
**Format:** Breaking
**Confidence:** high
**Source:** https://eastasiabrief.com/shipbuilding/vulcan-elements-wins-us-army-drone-permanent-magnet-contract-457
**Publisher:** East Asia Brief (https://eastasiabrief.com/)
---
## What to know
- Vulcan Elements wins US Army contract for drone NdFeB magnets under SkyFoundry
- Army aims for 1 million small drones per year at Tobyhanna Army Depot
- Statutory DFARS ban on Chinese permanent magnets takes effect Dec. 31, 2026
*A worker uses tweezers to handle a small magnet while assembling an electric motor component inside a manufacturing facility. (AI-generated image)*
Vulcan Elements confirmed Sept. 30 it won a competitive US Army contract to supply rare earth permanent magnets for military drones, advancing a Pentagon mandate to cut Chinese components from defense supply chains.
The award feeds the Army's SkyFoundry initiative, a defense manufacturing project that aims to produce up to 1 million small unmanned aircraft systems annually at Tobyhanna Army Depot in Pennsylvania.
Under the contract, Vulcan Elements will supply sintered neodymium-iron-boron magnets for brushless direct-current motors. The compact motors drive propeller rotation and serve as the primary propulsion source for tactical drones.
China currently refines roughly 90% of global rare earth elements and manufactures more than 90% of sintered neodymium permanent magnets, leaving Western defense contractors dependent on Chinese processing facilities.
Army solicitations required a fully domestic, vertically integrated production process. Bidders had to prove that raw mineral feedstocks, intellectual property, processing software and manufacturing equipment operated entirely outside Chinese ownership and control.
The procurement award marks the 10th military contract for Vulcan Elements, an advanced materials startup founded in 2023. The company operates a commercial pilot manufacturing plant in Durham, North Carolina.
The Durham facility currently produces sintered neodymium magnets with an annual manufacturing capacity of roughly 10 metric tons, supplying small batches of magnets for early military testing programs.
To meet mass-production demand, Vulcan Elements is constructing a 1-million-square-foot manufacturing plant in Benson, North Carolina. The company plans to invest nearly $1 billion across the site.
The Benson factory is designed to produce 10,000 metric tons of neodymium permanent magnets annually once fully operational. The facility is expected to create 1,000 manufacturing and engineering jobs.
The expansion is backed by a $1.4 billion public-private capital agreement finalized in late 2025. The Pentagon's Office of Strategic Capital authorized a $620 million conditional loan commitment for the project.
The US Department of Commerce contributed $50 million in federal incentives under the CHIPS and Science Act for equipment procurement. The Commerce Department received a $50 million equity stake in return.
Private investment funds provided the remaining $550 million in equity capital to finance site development, power infrastructure and industrial furnace installations in Johnston County, company corporate filings show.
Rare earth magnets are foundational to military capabilities that defend the country, Vulcan Elements Chief Executive John Maslin said in an official statement detailing the supply agreement.
Domestic manufacturing ensures military units can deploy small drone systems without relying on foreign export permissions or vulnerable maritime shipping lanes, Maslin said in a press release.
Securing separated rare earth oxides presents the chief operational challenge for Western magnet makers. Unrefined rare earth ores must undergo solvent extraction to yield pure neodymium and praseodymium oxides.
To secure domestic feedstock, Vulcan Elements entered a joint procurement partnership with ReElement Technologies. ReElement operates hydrometallurgical refining systems designed to recycle end-of-life magnets and electronic components into separated oxides.
The Office of Strategic Capital awarded an $80 million direct loan commitment to ReElement in late 2025. Private matching capital will help scale ReElement's recycling and separation operations.
Vulcan Elements also established an offtake agreement with Ucore Rare Metals. Ucore plans to supply commercial quantities of separated heavy and light rare earth oxides from a planned processing facility in Louisiana.
Initial deliveries from Ucore's Louisiana facility are scheduled to begin in 2027. Separately, Vulcan Elements is testing heavy rare earth compounds extracted by Energy Fuels from monazite sands in Utah.
The Army established SkyFoundry in October 2025 as a pilot manufacturing initiative to eliminate supply bottlenecks. Program planners set an interim target of assembling 10,000 drone airframes per month by late 2026.
Small reconnaissance and strike drones typically employ four to eight brushless motors. Sintered neodymium magnets provide high torque and power efficiency while keeping motor weight low, extending airborne flight times.
Beijing tightened export restrictions on heavy rare earths in April 2025, requiring special government export licenses. In August 2026, Chinese authorities imposed stricter export controls on specified drone airframes and propulsion parts.
Those export restrictions heightened supply risks for Western defense primes. Most commercial brushless motors assembled in allied nations rely on Chinese NdFeB magnets, leaving defense programs vulnerable to sudden trade cutoffs.
Under the Defense Federal Acquisition Regulation Supplement, US defense contractors face strict restrictions on Chinese specialty metals. A statutory prohibition banning Chinese sintered neodymium magnets in procured military systems takes mandatory effect Dec. 31, 2026.
The regulatory deadline compels Pentagon program offices to establish qualified domestic part numbers. SkyFoundry serves as the military's testing ground for fully domestic drone subassemblies, including motor magnets and flight computers.
The Army solicitation and Vulcan Elements did not disclose the total dollar value of the contract, the initial magnet delivery volume or the contractual completion date.
Tobyhanna Army Depot engineers plan to evaluate the initial batch of domestically powered drone motors during operational assembly trials in the first quarter of 2027.
## Impact map
| Event | Korea | China | Japan | Global impact |
| --- | --- | --- | --- | --- |
| SkyFoundry drone magnet contract | no direct impact, domestic motor suppliers monitor US defense procurement rules | refiners in Ningbo and Baotou lose addressable US defense drone demand | Shin-Etsu Chemical and Proterial see indirect allied interest in non-China feedstock | Pentagon decouples tactical drone propulsion from Chinese supply chains ahead of Dec. 31 mandate |
## In this story
- **Companies:** Vulcan Elements
- **Exposed:** ReElement Technologies, Ucore Rare Metals, Energy Fuels
- **Policy:** Economic Security, Export Controls, Subsidies
- **Impact:** Supply Chain, Order Book, Compliance
## Primary sources
1. defense.gov
2. theautochannel.com
3. vulcanelements.com
4. defencefulcrum.com
5. tectonicdefense.com
---
Cite as: East Asia Brief, "Vulcan Elements wins US Army drone permanent magnet contract," September 30, 2026. https://eastasiabrief.com/shipbuilding/vulcan-elements-wins-us-army-drone-permanent-magnet-contract-457