On July 10 local time, Reuters reported that American startup Rare Element had stopped seeking a $80 million loan from the Pentagon. This loan was part of a broader initiative by the Trump administration to stimulate domestic production of key minerals and challenge China's dominance in this field.
Officials stated that this decision was made after ReElement failed to meet the government's requirements for due diligence in conditional loans, but no detailed explanation was provided. The two also revealed that ReElement is currently seeking other forms of federal assistance, which may include a new government loan with different terms.
According to reports, this $80 million loan is part of a $700 million financing plan for critical minerals announced by the Office of Strategic Capital of the US Department of Defense in November last year. The plan also includes a $620 million loan for the startup magnet manufacturer Vulcan. Vulcan plans to use rare earths refined by ReElement to manufacture magnets for the U.S. military.
At the time the loan scheme was announced, the US side claimed that ReElement and Vulcan were key measures to reduce US dependence on China. China plays a dominant role in the global processing of rare earths and in the production of magnets used in electric vehicles, advanced electronic products, and US military systems.
Regarding ReElement’s loan issues, a White House official only said, “The Trump administration continues to discuss various transaction structures with ReElement to help strengthen America’s supply chain.” The Pentagon declined to comment.
White House senior advisor Peter Navarro responded by saying that the government will continue to support ReElement. In May, when the Pentagon considered suspending a $80 million loan due to concerns about ReElement’s ability to scale up its technology and its long-term revenue prospects, Navarro criticized the Department of Defense for mishandling the situation.
In answering questions regarding loans, Navarro said that he had strongly advocated for providing financing to Vulcan/ReElement as part of the government's efforts to establish domestic supply chains for materials and technologies that are crucial to America's national security.
"Small startups like ReElement and Vulcan represent the resilience of supply chains and the future of America's reindustrialization. Their innovative technologies will help counter China's price advantages and enhance America's national security," he said.
Earlier, sources familiar with the matter revealed that if the Pentagon withdraws its loan for ReElement, it will not affect the cooperation project with Vulcan. However, it is unclear whether Vulcan needs to find a new supplier for oxides.
The aforementioned government official confirmed that the loan provided by the Pentagon to Vulcan is still progressing as planned. However, the connection between Vulcan and Donald Trump’s younger son, Donald Trump Jr., is drawing attention from Democratic lawmakers.
As a partner in Vulcan’s investment private fund, Trump Jr. is questioned about whether he influenced the company to obtain federal support. Democrats have requested verification as to whether the review procedures were compliant. Neither Vulcan nor Trump Jr. has commented on this matter.
