Vulcan Elements raises $65M Series A to build America's rare earth magnet supply chain and end dependence on China

public. com. And we have our next guest in the studio. That's right. We got to get the gong ready. Vulcan elements. Come on in from waiting room, John. John, how you doing? What's happening guys? I'm well. Big morning. Uh, give us a little introduction. Tell us the news. What's going on? Yeah, good afternoon.

Uh, John Madison. I'm the CEO and co-founder of Vulcan Elements. We uh are a manufacturer of birth magnets and we just raised a $65 million series A. Hit it, John. Congratulations. $65 million. Incredible. Perfect size for a series A. Perfect size. Perfect size. Perfect size. Um amazing.

Uh give us quick backstory on yourself and the company and then we'll get into it. Mhm. Yeah. So, uh former naval officer, spent six years active duty in the US Navy. Uh most of that time was in Washington DC with the Navy's nuclear energy program.

worked across Navy ship building, uh, submarines, aircraft carriers, got out a few years ago, went to Harvard Business School, and, uh, was just very focused on Yeah, business school. Humble brag. Yeah. No, they call it I've heard it called the Harvard of business schools. It really is. It really is. Yeah.

Well, I'll take it. I'll take it. uh but uh was spending a lot of time thinking about my time in the Navy, thinking a lot about what were the critical components as a good supply officer would that were going to define the 21st century technology race.

When we think about drones or physical AI, data centers, next generation defense technologies, what were the underlying components that would enable that? And doing my homework, it came down to three components. Semiconductors, batteries, rare earth magnets. Mhm.

Uh the way that I like to think about it is if you think about your own bodies, a semiconductor is like your brain, a battery is like your heart, and a rare earth magnet is like your spine. It literally converts electricity into motion.

Uh there was so much focus at the time on semiconductors and batteries, but no one was thinking about rare earth magnets.

And if China produces over 90% of those rare earth magnets, that means that we're going to have to ask permission on what we're allowed to build and buy over the next 5 years, which is not an acceptable outcome. So, we're trying to rebrand them.

We're just calling them Earth magnets because we've heard that that that they're not actually that rare. They're in the ground all over the place. Uh, is that true? What's the strategy? Are you actually mining these, just refining them? Like, where is America like?

Explain the full supply chain to go from something in the ground to something actually useful and then where you want to slot in at least immediately. I'm sure that there's vertical integration down the pipe at some point. Yeah. So, we're we're a refiner and manufacturer, but just a quick rare earth 101.

So, everyone's talking about critical minerals. What does that mean? A critical mineral is an element on the periodic table that is critical to our economy with the supply chain that can be easily disrupted. Rare earths are a subset of that. There are 17 rare earth elements on the periodic table.

Uh, go back to 10th grade chemistry. Close your eyes. Think the part think about the periodic table. The part that's detached that your teacher told you to ignore. Yeah, that first row, those are the rare earths. Funny. Exactly. Of those 17 rare earth elements, only four of them represent over 90% of the economic value.

Neodymium, praisemium, turbium, desposium. Okay. The main use for those four is a rare earth magnet. So the way to actually make a rare magnet is you either mine that material uh and that can be from all over the world. China only mines 55% of the global supply or you take recycled end of life magnets.

You have to separate those into an individual rare earth element. Turn that into a high purity metal. We buy that metal. You then take all the rare earth's iron, boron, and uh you turn that into an allo, an alloy, a super fine powder.

You press it within a magnetic field, and then you shape, coat, grind, and that's a magnet that can go into an MRI, a missile, a ship. What does a go to market look like?

I imagine you're focused on specific c customer types early on that are maybe less price insensitive so that you can start to scale and ultimately kind of grow into other categories. Yeah. So one thing that I say is Vulcan elements is focused on defense, aerospace and critical economic industries.

Uh we do not make magnets for you to make a a a smoothie in your blender at home. Uh we're not focused on kitchen appliances, right?

So we are focused on data centers, robotics, drones, defense applications, aerospace applications, uh enabling what the war fighter needs, enabling what the economy needs in order to win the 21st century technology race. It's as simple as that.

What how how quickly can you go from $65 million series A to actually selling the end product to customers? We're already selling product to customers out of our out of our small scale pilot facility. Uh so we took our first check December of 2023.

Uh we told investors day one if you give us a if you give us a dollar Q1 2025 we will have a fully operational decoupled rare earth magnet facility online. We did that on time. We did that on budget. We are selling magnets right now in that facility. I'm sure you have a lot of equipment.

Uh, is there an ASML of uh of rare earth refinery that you need to buy from? Is that an American company? What is the rest of the what is your supply chain look like? And uh is that is that a resilient supply chain?

So you guys already asked the the question around, you know, where do these materials come from, where the minerals come from? This is not a a mineral availability problem. This is a software and equipment problem.

So, we actually helped co-develop some of the first pieces of rare earth magnetic manufacturing equipment made in the United States in the 21st century. There are so many amazing manufacturing equipment manufacturers in the United States who are doing aerospace and battery work.

We've just partnered with them to say, "Hey, let's tweak a furnace and do it for rare with magnetics. " So, 100% of our equipment is from the United States or Allied countries. Wow, that's pretty sweet. Um, bit of a dumb question.

Uh, are are the materials magnetized all the way through your process or is there a period where they get demagnetized and then kind of remagnetized? So, the elements like iron, like rears, they're they're naturally magnetic. Okay. Uh, this is actually something that I learned when we were starting the company.

When does a magnet become a magnet? Yeah. Well, you actually have to throw it through a magnetizer. Yeah. uh toward the end of the process. I remember reading a book to my son uh about how how magnets get made and it was like sometimes there's a rock that gets struck by lightning. Is that real? I don't know. But yeah.

So really the intent is you need to make sure that you're creating a centered block, all those particles are perfectly aligned. Uh you've done all the the metallography, the microructure, the grain distribution perfectly.

And then when you're running it through that magnetizer, it actually hits the grade, the heat tolerance, the magnetic strength or flux density that is required to actually sell to a customer. Mhm.

What's you what's unique about building a startup where it feels like there's like from my view and and what what you've said, it feels like there's zero demand risk and you probably the question comes down to like can you deliver it at a at a price that's competitive, but then it's really more so can you can you actually deliver it?

Can you deliver it at the scale that that really becomes meaningfully uh important to to national security? But kind of what what was your calculus I guess going into building this company with with that kind of um understanding of the market? Execution is the entire game.

So we knew that we had to find incredibly sophisticated technicians and engineers and PhDs. We needed to understand how to interface with the DoD and the government, how to interface with large OEMs. We had to understand how to talk to mining companies and recycling companies.

And so the bet was, can you actually build the team that can put all of those different pieces of the jigsaw puzzle together in a way that's cohesive to where you can actually get a contract, raise the money, and put a magnet in a customer's hands. And so we made we made a bet on ourselves.

And that's what we've done is by finding incredibly smart people who are missiondriven, who want this to happen, we've been able to deliver. we've been able to execute across every different domain within the industry required to actually get a result.

Now, a lot of this has to be like the demand for Americanmade rare earth uh magnets has to be somewhat tied to trade tensions with China.

uh if those get resolved and you know Trump's sending Nvidia H20s over there and he's happy with that deal and then all of a sudden Cin is like yeah America you can buy as many rare earth magnets as you want. Uh is that is that a short-term medium-term risk?

Is there a way that you can uh can like ramp the economic model so that you're competitive even if we were in a fully free trade regime? So our small scale facility was sold out a full year before the trade tensions.

So there's just so much demand that even even with trade tensions like you you you can fulfill the backlog. Correct. People want resiliency within their supply chains. People want this component on. But to your point, I think it's incredibly important that we're not just copying and pasting.

If you copy and paste Chinese manufacturing into the states, the unit economics make no sense. Yeah. Because they'll beat on labor probably. Right. Exactly. So, one thing that's nice about this industry is there hasn't been a lot of innovation.

Uh, and when you find incredibly smart people from different industries, aerospace and battery, ship building, you're able to actually bring all of that learning and you're start you can start taking a lot of low hanging fruit, innovate really quickly, and then over half of our technical team, they're scaleup engineers.

Yeah. And so when you think about delivering at scale, coming down that cost curve, reducing operating costs, uh, and making sure that you are ultimately, you know, as cost competitive as you can be against the Chinese. Yep. Yeah. What are your what are your goals for the next couple years look like?

You said you kind of called your shot in 2023. You delivered against it uh earlier this year. What do you want to do uh with the with the 65 million and and going forward generally?

So the 65 million we're going to go to commercial large scale commercial scale se several hundred tons over the next couple of years several thousand tons by the end of this decade.

And what what is the what is the kind of market value of that kind of production minimum several hundred million in topline uh up to several billion. Thank you J. Figured figured there were some big numbers. Fantastic. Awesome. Well yeah thank you for everything you're doing. This is very exciting. Super important work.

Glad you're doing it. Yeah. We'll talk to you soon. Have a great day. Thanks, guys. Cheers. Talk to you soon. Bye. Take a little bit of that money, buy a billboard on adqu. com. Out ofome advertising made easy and measurable. Say goodbye to the headaches of out of home advertising. Only adqu combines