The Pentagon’s Office of Strategic Capital (OSC) has conditionally committed a $500 million loan to Phoenix Tailings, a U.S.-based startup specializing in rare earth element separation and metallization. The loan supports the construction of a new, state-of-the-art rare earth processing plant aimed at boosting domestic capacity and securing critical mineral supply chains vital for defense and advanced manufacturing.
This financing is part of an approximately $1 billion public-private partnership combining OSC’s long-term debt financing with additional private capital. The new facility, often referred to as the “Freedom Facility,” is designed to close a critical midstream bottleneck in the U.S. supply chain for rare earth elements’ materials essential for permanent magnets used in defense systems, renewable energy technologies, and electronics.
Phoenix Tailings plans to begin operations at the new plant by 2028. The facility will expand U.S. capabilities to process rare earth raw materials into purified metals, strengthening domestic production resilience amid geopolitical concerns over reliance on foreign sources, particularly China.
The Pentagon has identified building a resilient and secure supply chain for critical minerals as a national security priority. By supporting enterprises like Phoenix Tailings, the OSC aims to accelerate technological and industrial capacity in this crucial sector.
Phoenix Tailings’ specialization in the technically complex process of rare earth separation and metallization positions it as a key player in reshoring critical mineral processing in the United States. The $500 million loan commitment is conditional upon Phoenix Tailings completing financial, legal, and technical due diligence steps before finalizing the financing.
This investment marks a significant step forward in the broader U.S. government strategy to reduce supply chain vulnerabilities and support domestic manufacturing of components dependent on rare earth metals. It follows earlier OSC commitments to other rare earth and critical minerals firms, including loans to companies like ReElement Technologies and Vulcan Elements.
Overall, the project represents a combination of strategic investment and industrial development that could support jobs, increase manufacturing capacity, and contribute to strengthening America’s position in critical mineral supply chains.
