The Pentagon is reconsidering an $80 million conditional loan to rare-earths refiner ReElement Technologies, raising tensions with the White House over efforts to reduce US reliance on China for critical minerals, according to Bloomberg.
The loan, announced in November through the Pentagon’s Office of Strategic Capital (OSC), was part of a broader $1.4 billion critical-minerals initiative alongside Vulcan Elements. But officials reviewing the deal have questioned ReElement’s ability to scale production and meet long-term revenue targets, according to people familiar with the matter.
The loan has not been canceled, and no funds have been disbursed. Pentagon officials emphasized from the outset that ReElement still needed to pass financial, legal, and technical due diligence before receiving funding.
The dispute highlights a broader divide inside the Trump administration between moving quickly to build domestic rare-earth supply chains and conducting rigorous vetting. White House trade adviser Peter Navarro criticized OSC’s review process as too burdensome for emerging companies, calling ReElement “exactly the kind of asymmetric bet we should be making.”
Bloomberg writes that Pentagon spokesman Sean Parnell defended OSC’s oversight, saying the office balances speed with disciplined dealmaking. The effort is overseen by Deputy Defense Secretary Stephen Feinberg.
ReElement CEO Mark Jensen said the company’s work with the government is ongoing and confirmed plans to continue developing its Indiana refining facility.
Under the agreement, ReElement would produce rare-earth oxides from recycled materials, while Vulcan would turn them into magnets used in defense and energy technologies. The Pentagon previously said the companies aimed to produce up to 10,000 metric tons of magnet materials over the coming years.
Despite concerns, the government’s backing helped ReElement attract additional private investment, including a $200 million strategic equity agreement with Transition Equity Partners announced in January.
ReElement, formerly a subsidiary of American Resources Corp., was described in a 2025 filing as being in a “pre-revenue development stage.”