Fact Check: Department of Defense Provided $620 Million Loan to Startup Backed by Donald Trump Jr.’s Venture Capital Firm

The U.S. Department of Defense has approved a $620 million loan to Vulcan Elements, a rare earth magnet startup backed by Donald Trump Jr.’s investment firm, sparking debate over potential conflicts of interest in federal funding decisions.

Vulcan Elements, which describes itself as “committed to improving U.S. and allied security by producing the rare earth magnets that are critical to economic and national security,” announced the loan on November 3, 2025. The funding comes from the Department of Defense’s Office of Strategic Capital (OSC) and represents part of a larger $1.4 billion partnership between the company and the federal government.

The Pentagon confirmed the arrangement in a November 21 statement, detailing that the OSC commitment includes separate loans of $620 million to Vulcan Elements and $80 million to ReElement, another company specializing in rare earth element purification and separation technology.

Rare earth magnets, which produce strong magnetic fields, have become increasingly critical to both civilian and military applications. They are essential components in computers, electric vehicles, and power tools, as well as in defense systems including smart bombs, guided missiles, and aerospace technology. China currently dominates global production of these materials, making domestic manufacturing capabilities a matter of national security concern.

Emil Michael, identified as the “Under Secretary of War for Research and Engineering” in the DOD statement, emphasized that the loans would strengthen American supply chains for “chip manufacturing, drones, electric vehicles, fighter jets, industrial motors, nuclear submarines, and satellites.”

The connection to Donald Trump Jr. emerged when Christopher Buskirk, founder and chief investment officer of 1789 Capital, posted on social media platform X on November 4: “We backed @VulcanElements & @_JohnMaslin with an investment from @1789Capital in their last round & are doing so again in the current round. Critical elements & battery manufacture are essential to American security & prosperity.”

Trump Jr. is listed as a partner at 1789 Capital on the firm’s website. This relationship has prompted accusations of nepotism and corruption on social media, with some users suggesting the Trump administration is “the most corrupt administration in the history of America” due to the apparent conflict of interest.

However, a Pentagon official told Snopes via email that “Mr. Donald Trump Jr. was not involved in any aspect of the conditional loan commitment discussions between OSC and Vulcan.” Neither 1789 Capital nor Vulcan Elements has publicly responded to requests for comment on the matter.

Beyond the DOD loan, Vulcan Elements is set to receive an additional “$50 million of federal incentives from the Department of Commerce under the CHIPS and Science Act, and $550 million in private capital,” according to the company’s statement.

The funding comes amid increased focus on securing domestic supply chains for critical technologies and materials. The Trump administration has consistently emphasized reducing dependence on foreign suppliers, particularly China, for strategically important components.

Industry analysts note that rare earth elements and their applications represent a crucial battleground in economic competition between global powers. The United States has historically relied heavily on imports for these materials, creating strategic vulnerabilities that the current administration appears determined to address.

Legal and ethics experts are reviewing the situation to determine whether the arrangement presents legitimate conflicts of interest or merely the appearance of impropriety. The outcome of these assessments could influence future decisions about government funding for companies with connections to presidential family members.

The case highlights the complex intersection of national security priorities, industrial policy, and concerns about government ethics in an era of heightened geopolitical competition.