The Pentagon announced Tuesday it will offer a conditional $500 million loan to Phoenix Tailings, a Massachusetts-based company working to build domestic rare-earth processing capacity, as the Defense Department moves to reduce American dependence on China for materials critical to modern weapons systems and electronics.
The investment, paired with another $500 million in private capital commitments, will fund expansion of Phoenix Tailings’ existing operations in Massachusetts and New Hampshire and the construction of a new rare-earth separation and metalization facility on U.S. soil.
David A. Lorch, director of the Pentagon’s Office of Strategic Capital, said in a statement that rare-earth midstream processing is a “key shortage area that needs to be rapidly addressed.”
“Supporting domestic processing for critical minerals and rare-earths is a key focus for the Department of Defense,” Lorch said.
Rare-earth elements are 17 minerals essential to the production of fighter jets, radar systems, next-generation missiles, cell phones, electric vehicles and a wide range of other advanced technology. The materials themselves are not particularly scarce, but the processing required to separate and purify them is expensive and technically demanding.
China has spent decades building dominance in that processing chain. Beijing now controls more than 90% of the world’s rare-earth refining capacity, giving it effective leverage over the pricing and supply of materials the U.S. military and defense industry depend on.
Phoenix Tailings uses a different method than traditional rare-earth miners. The company processes tailings, the leftover waste material from conventional mining operations, and recovers rare-earth elements from what other operations leave behind.
The Pentagon loan is the latest in a series of direct investments the Trump administration has made in companies considered critical to the U.S. military-industrial supply chain. Defense officials have signaled they plan to continue pushing capital into domestic processing and manufacturing as part of a broader effort to reduce strategic vulnerabilities tied to foreign supply chains.
The loan to Phoenix Tailings is conditional pending final agreements between the company and the Department of Defense.
