Phoenix Tailings secures $500M Pentagon loan to build domestic rare-earth plant

The Pentagon just wrote a half-billion-dollar check to a startup that pulls rare earth metals out of mining waste. Phoenix Tailings, a company that extracts and refines rare earth elements from industrial byproducts, landed a $500 million conditional loan commitment from the Department of Defense’s Office of Strategic Capital.

Combined with private investment, the total funding package is expected to approach $1 billion. That kind of money buys you a new processing facility, expanded operations, and a meaningful step toward untangling the US from China’s grip on the materials that power everything from fighter jets to electric vehicles.

What Phoenix Tailings is actually building

The company plans to use the financing to expand its existing facilities in Burlington, Massachusetts, and Exeter, New Hampshire, while also constructing an entirely new plant. That new facility has been branded the “Freedom Facility,” which will handle rare earth separation and metallization processes.

Phoenix Tailings focuses specifically on heavy rare earth elements, including dysprosium, terbium, and neodymium-praseodymium, commonly referred to as NdPr. These materials are essential for permanent magnets used in defense systems, wind turbines, and EV motors.

The company already operates a small-scale production line in New Hampshire that supplies the defense sector with heavy rare earth metals. This loan is designed to take that from “proof of concept” to “meaningful domestic capacity.”

Phoenix Tailings uses solvent-free, low-emission extraction technology. Traditional rare earth processing is notoriously dirty, generating toxic byproducts that have made it politically radioactive in Western countries. Phoenix Tailings’ cleaner process sidesteps that problem, which matters both for permitting and for the long-term economics of the operation.

The funding picture so far

Phoenix Tailings has raised more than $116 million in previous funding rounds, including a $40.2 million Series B extension that closed on February 19, 2026.

On top of the Pentagon loan, the company is also in line to receive part of a $134 million award from the Department of Energy. That DOE funding is earmarked for a demonstration-scale facility being developed in collaboration with MIT and the University of Minnesota.

The Office of Strategic Capital, the Pentagon entity behind the $500 million loan, was established specifically to direct private capital toward technologies deemed critical to national security. China controls roughly the vast majority of global rare earth refining capacity and has shown a willingness to use that leverage as a geopolitical tool.

Why this matters beyond defense

When China restricted rare earth exports to Japan in 2010 over a territorial dispute, it sent prices soaring and triggered a global scramble to develop alternative supply chains. That scramble, more than 15 years later, still hasn’t produced enough non-Chinese capacity to meaningfully reduce the dependency.

The Pentagon’s bet on Phoenix Tailings is part of a broader effort to fill the gap between mining raw materials and manufacturing finished products. It’s the middle of the supply chain that’s been hardest to build outside of China, because the processing technology and expertise have been concentrated there for decades.

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