If you weren’t sold on the whole “the US is getting hella serious about rare earths and critical minerals” thing, well, the Pentagon is back to prove you wrong—again.
In case you missed it, on Monday the DoD announced that the Economic Defense Unit (EDU), in partnership with the Office of the Under Secretary of War for Acquisition and Sustainment (OUSW(A&S)), had made a $25M investment in startup ReElement Technologies to “expand domestic refining capacity for rare earth elements and other defense-critical minerals at the company’s Marion, Indiana facility.”
Per the department’s announcement, the money will help expand ReElement’s production lines and “focus on processing end-of-life magnets and other recycled materials to produce high-purity rare earth oxides, yttrium, gadolinium, germanium, and gallium.”
The latest investment comes after the Office of Strategic Capital announced an $80M loan to the company (along with a $620M to their partner, Vulcan Elements, but we’ll get to that) last fall. ReElement reportedly later withdrew from that loan because of due diligence issues.
Sheesh. Guess the issues weren’t that serious.
Dig deep: Now, you might be sitting there thinking, “Ugh, they’re talking about rocks again.” But just hold on guys, this stuff is important.
- Rare earth magnets are found in everything from F-35s (900 pounds of rare earth materials in each) to nuclear subs (9,000 pounds) and drones because of their magnetic strength, thermal stability, and miniaturization capabilities. For the less scientifically minded among us, they turn electricity into motion.
- China processes upwards of 90 percent of the world’s rare earths—only slightly more than the US’s 1 percent.
- The Pentagon—and the broader Trump administration—are very keen on decoupling the rare earths supply chain from China. The DoD has committed over $1.5B in funding (including a $400M direct investment in MP Materials last year, that aforementioned $700M in loans last fall, and a $500M loan for a rare earths plant to Phoenix Tailings last month) to the country’s rare earth capabilities—and there seems to be a lot more coming.
- And this capacity can’t come quickly enough—Congress has banned the use of Chinese magnets by the DoD starting next year.
- It’s worth noting that the OSC (where a lot of this funding is coming from) has a ton of money to play with. The FY2027 budget request slotted in over $20B for the office’s loan program.
Boil it down: Here’s where ReElement fits into the broader rare-earths picture.
- The company is (important to note) not a mining company—they refine rare earths from sources including mines, recycled magnets, batteries, and manufacturing waste.
- They take those raw materials and separate and purify them into high-purity rare earth oxides and battery materials.
- Then, magnet makers like Vulcan Elements can make them into the high-powered magnets needed for things like fighter jets and drones.
- The bigger and better their processing line, the more purified rare earths the company can produce, which means a bigger supply of domestically-made magnets. That’s what the Pentagon is betting on here with this $25M.
Along with all the hype around companies like ReElement and Vulcan, it’s worth noting that there has been some, erm, controversy in the Trump administration’s rare earths world.
- Donald Trump Jr.’s PE fund, 1789, is a major investor in Vulcan Elements. After that mega-financing package by OSC last year, a ProPublica investigation found that White House advisor Peter Navarro pushed hard for the $620M to go through.
- ReElement is not linked to 1789—they had just teamed up with Vulcan to process the rare earths the company would later turn into magnets.
- Lawmakers have asked for a GAO review of the OSC package to see if Trump Jr.’s involvement in Vulcan had anything to do with the loan.
- Currently, there is no hard evidence that Trump Jr. himself was involved in the loan negotiations.
- But there are other critical minerals deals—including that mine in Kazakhstan—where the Trump administration has reportedly pushed hard for deals that could majorly benefit the President’s children.