The Pentagon’s decision to award a $620 million loan to a little-known North Carolina rare-earth magnet startup is facing renewed scrutiny after reports revealed a behind-the-scenes White House push tied to allies of President Donald Trump.
The deal marked a major breakthrough for the startup, Vulcan, and for 1789 Capital, a venture capital firm backed by Donald Trump Jr., which acquired an undisclosed stake in the company roughly three months before the Pentagon announced the loan.
Around the time of the investment last year, Bloomberg estimated the valuation of Vulcan, which had been founded just two years earlier, at roughly $200 million. After the Pentagon deal became public, estimates surged to nearly $2 billion.
According to ProPublica, the request to provide hundreds of millions of dollars to Vulcan came directly from Peter Navarro, Trump’s senior trade adviser and a close ally of Trump Jr.
Vulcan was reportedly the only funding proposal personally initiated by a senior White House aide.
People familiar with the process told ProPublica that Pentagon officials were instructed to move unusually quickly after receiving the request.
“The call came from the White House: We have to get this done,” one person familiar with the matter told ProPublica.
Another source said companies seeking similar funding are normally vetted for months, but Vulcan’s loan was approved within weeks because officials were told it was a White House priority.
The Daily Beast has contacted Vulcan and 1789 Capital for comment.
The investment was part of a broader effort to reduce U.S. dependence on China for rare-earth materials, which are critical for both military and commercial manufacturing.
China currently dominates the global supply chain for several key rare earths.
As of last year, China produced the world’s entire supply of samarium, a metal used in magnets that help guide Tomahawk missiles and start engines in F-35 fighter jets. Rare earth materials are also used in semiconductors, drones, automobiles and other advanced technologies.
Navarro has repeatedly argued that China’s control over rare-earth supply chains poses a national security threat.
“China has revealed itself with this rare-earth issue as a country which is using the weaponization of their manufacturing floor, their supply chains, to exert pressure, not just on the United States, but to every other country that might do something that gets in the way of the Chinese dream of world domination,” Navarro, 76, previously said on an episode of The Mishal Husain Show. “That’s what we’re fighting now.”
Navarro, an economist and former University of California-Irvine professor, helped shape Trump’s aggressive tariff and trade policies during his first term.
He later served four months in federal prison after being convicted of contempt of Congress for refusing to comply with a subpoena from the House committee investigating the Jan. 6 Capitol riot.
He returned to the Trump orbit during the president’s second term as a senior counselor focused on trade and manufacturing.
Navarro and Trump Jr. have also developed a close personal relationship in recent years. Trump Jr. visited Navarro in prison and was among the small group Navarro thanked in his latest book for having “my back when it was against the wall.”
Just one week before the Vulcan deal was announced, Trump Jr. hosted Navarro on his streaming show and encouraged viewers to purchase Navarro’s book.
And in an October episode of “Triggered,” Trump Jr. referred to Navarro as “my boy” and praised the “jacked” physique Navarro developed while in prison.
Trump Jr. has denied having any discussions about the Vulcan deal with Navarro, and 1789 Capital denied having any involvement.
“No company receives preferential treatment,” a Pentagon spokesperson told ProPublica. “Outside affiliations, investors, or political connections play absolutely no role in the Department’s funding decisions.”
White House spokesperson Anna Kelly told The Daily Beast: “All actions by President Trump and his administration are taken in the best interest of the American people—and any so-called ‘reporters’ pushing otherwise are recycling the same, tired narrative that Democrats and the legacy media have been pushing for a decade.
“The President’s entire team, including Senior Counselor Navarro and officials at the Department of War, is working together and with private industry to secure America’s critical mineral supply chain at Trump Speed.”
Still, the arrangement has drawn sharp criticism from Democrats.
A group of Democratic senators demanded records explaining how Vulcan secured the loan, warning that the Trump family’s business ties could be “resulting in a waste of taxpayer dollars and a threat to national security.”
House Democrats also attempted to subpoena Trump Jr. to testify about the Vulcan deal, though Republicans blocked the effort.
“Donald Trump Jr. must be made to answer whether the president’s son illegally profited from his father’s presidency,” Oregon Rep. Maxine Dexter said earlier this year.
