US offers conditional $500M loan to Phoenix Tailings for rare-earths plant

The US Department of Defense’s Office of Strategic Capital has issued a conditional loan commitment of $500 million to Phoenix Tailings, a company focused on rare earth element processing. The deal is designed to do something the US has talked about for years but struggled to execute: actually build domestic capacity for the minerals that power everything from fighter jets to electric vehicles.

When combined with private capital, the total funding package is projected to hit roughly $1 billion. That money will go toward scaling Phoenix Tailings’ existing facilities and, more importantly, building a new rare earth separation and metallization plant on US soil.

The loan to Phoenix Tailings is conditional, meaning it still has to clear standard due diligence across financial, legal, and technical domains before reaching financial close.

This isn’t happening in a vacuum. The US government has been methodically assembling a portfolio of rare earth bets. MP Materials, which operates the only active rare earth mine in the US at Mountain Pass, California, has received federal backing. USA Rare Earth has also landed funding commitments. The government has simultaneously expanded its strategic stockpiling efforts and issued additional loans aimed at bolstering domestic mineral processing.

Phoenix Tailings stands out in this group because of its focus on the downstream side of the equation. Mining rare earths is one challenge. Separating and refining them into usable metals is where China’s dominance is most pronounced, and most difficult to replicate. Building a new separation and metallization facility addresses the part of the supply chain where the US is weakest.

The Office of Strategic Capital was created specifically to make these kinds of investments. It functions as the Pentagon’s venture-style funding arm for technologies and supply chains deemed critical to national security.

The Trump administration accelerated the push to onshore critical minerals supply chains, and that momentum has carried through subsequent policy cycles.

The risk to watch is execution. Conditional loans can fall apart during due diligence. Building rare earth processing facilities is technically demanding, environmentally complex, and capital-intensive. MP Materials has spent years working toward full separation capabilities at Mountain Pass and still faces challenges. Phoenix Tailings will need to demonstrate that its technology works at commercial scale, not just in a lab or pilot facility.

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