Army Drone Magnet Deal Raises a Bigger Question: When Can the Supply Chain Be Fully Domestic?

Vulcan Elements already makes rare earth magnets in North Carolina and is building a larger plant. Public figures do not yet show when supply could match the Army’s production goal.

The U.S. Army has selected Vulcan Elements to supply rare earth magnets for its SkyFoundry drone initiative, Axios reported Wednesday. The magnets will support production of brushless motors for small drones. Vulcan confirmed the selection, but did not disclose an order quantity or delivery schedule.

The award highlights a wider challenge for U.S. drone manufacturing. Rare earth magnets power many drone motors, while battery cells and other key parts have their own supply chains. As the United States works to reduce its reliance on Chinese components, China has tightened export controls. Its April 2025 rules require licenses for certain rare earth materials and magnets. In August 2026, China also imposed stricter reviews on exports to the U.S. of listed drones, key parts and related technology. Building more drones domestically requires reliable sources for the components inside them.

Production Today and Plans for Expansion

Vulcan says it makes neodymium iron boron magnets at its small-scale facility in Durham, North Carolina, which opened in 2025. It is building a larger plant in Benson, North Carolina, designed for 10,000 metric tons of annual magnet capacity. (That is planned capacity, not current output.) Vulcan has not announced a firm date for the Benson plant to reach full production.

The company is also developing sources for the rare earth materials used to make its magnets. It has an offtake agreement with ReElement Technologies and a memorandum of understanding with Ucore. Ucore expects to begin supplying material from Louisiana in 2027. Vulcan is also testing material from Energy Fuels. The companies have not identified which material source will serve this Army award.

What Do the Production Numbers Tell Us?

Vulcan says SkyFoundry aims to produce one million small drones a year in the United States. For perspective, the FAA estimates that 424,516 nonrecreational small drones were active in the U.S. in 2025. The Army program’s stated annual production goal is more than twice that civilian fleet estimate. They measure different things, so the comparison shows the scale of the goal, not the number of magnets needed to meet it.

There is no reliable public figure for how many SkyFoundry drones Vulcan’s current or planned production could support. The company has not disclosed its present annual output, its delivery commitment to the Army or the magnet requirements per aircraft. Its planned Benson capacity will also serve other customers and industries. Those details will matter in assessing when magnet supply could support production at SkyFoundry’s intended scale.

Still, the announcement demonstrates clear progress – and potential – in the direction of onshoring the drone supply chain.

The U.S. has a foundation to build on. The U.S. Geological Survey reports substantial domestic rare earth resources and estimates that U.S. mines produced 51,000 metric tons of rare earth oxide in concentrates in 2025. Mining output alone does not establish a secure magnet supply: the material must also be separated, processed and made into magnets at scale. Vulcan’s existing production and planned expansion are steps toward that capacity. As those facilities and material partnerships develop, their output will give a clearer picture of the timeframe for supplying U.S. engines for U.S.-made drones.

Read more:

• China Tightens Drone Export Controls, Adding New Pressure to U.S. Supply Chains
• Finding the Missing Piece of America’s Drone Supply Chain
• The Next Drone Supply Chain Challenge: Rare Earth Magnets