Highlights

• Cato Institute critiques Washington's $50M equity stake in Vulcan Elements, warning it blurs industrial policy and patronage, but understates China's control over 90% of global rare earth processing.
• The real chokepoint isn't just NdPr—it's heavy rare earths like dysprosium and terbium for high-performance magnets, where Western dependence on China will exceed 90% through 2030.
• Conservative critics see the danger of government picking winners but miss that Beijing already won, building a rare earth empire through state-backed firms and export controls.

A Cato Institute essay by Tad DeHaven usefully warns that Washington’s proposed equity stake in Vulcan Elements could blur the line between industrial policy and political patronage. The facts behind the case are real enough: Commerce announced a nonbinding plan in November 2025 to provide $50m in incentives in exchange for equity in Vulcan, while the Pentagon’s Office of Strategic Capital later backed Vulcan and ReElement with a joint $700m conditional loan package, as Rare Earth Exchanges™ has reported.

What Cato Gets Right—and What It Misses

Cato is right that America’s weakness is not geology but the broken chain from separation to metallization to magnets. It is also right that procurement, permitting, and allied coordination are cleaner tools than ad hoc state shareholding. But the essay understates the scale of the threat. China is not simply a successful competitor. It produces over 90% of the world’s processed rare earths and rare earth magnets, and Western dependence on China for heavy rare earths is still expected to remain above 90% by 2030.

The Monopoly Inside the Monopoly

That matters because the decisive choke point is not just NdPr. It is dysprosium, terbium, and other heavy rare earths needed for high-performance magnets in defense, robotics, and EVs. China has tightened export controls and licensing over rare earth materials and related products, demonstrating that its firms operate less like ordinary corporations than extensions of state strategy.

Rare Earth Exchanges Verdict

So no: this conservative/libertarian critique does not fully grasp the magnitude of the situation. It sees the danger of Washington picking winners. It sees less clearly that Beijing already picked them long ago—and built an empire around them.