NOBLESVILLE, Indiana - ReElement Technologies, a startup developing a novel process to refine rare earths and other critical minerals, is no longer pursuing an $80 million Pentagon loan that had been proposed as part of a broader effort to re-establish domestic supply chains for those materials, two administration officials told Reuters.
The officials said ReElement moved away from the conditional loan after encountering difficulties satisfying federal due diligence requirements tied to the offer. The officials spoke on condition of anonymity and did not provide supporting documentation about the specific due diligence deficiencies.
Rather than abandoning government support altogether, the company is reported to be seeking alternative forms of federal assistance - including the possibility of a restructured government loan under different terms - the officials said.
Context of the loan package
The $80 million proposed loan for ReElement was a component of a $700 million critical minerals financing package unveiled last November by the U.S. Department of Defense's Office of Strategic Capital. The package included a $620 million loan to Vulcan Elements, a startup magnet maker tied to that broader strategy to build a domestic ecosystem for rare earths and magnets.
Vulcan Elements lists 1789, a private equity fund where Donald Trump Jr. is a partner, among its investors. Officials said Vulcan plans to use rare earths refined by ReElement to manufacture magnets intended for U.S. military applications.
Administration and company responses
White House senior adviser Peter Navarro defended the financing concept, saying he had pushed for the Vulcan/ReElement package as part of efforts to construct domestic supply chains for strategic materials and technologies. "Small startup companies like ReElement and Vulcan represent the future of supply chain resilience and the reindustrialization of the United States," Navarro said in response to questions about the loan. "Their innovative technologies will help counter China’s pricing power and boost America’s national security."
ReElement CEO Mark Jensen told Reuters in June that the company had opted to rely on private capital instead of government debt, expressing a desire to avoid the costs associated with borrowed funds. "Putting debt on your balance sheet adds cost to your balance sheet," Jensen said during a visit to ReElement's Noblesville pilot facility on June 16. He argued that pursuing equity investment would better position the company to drive down costs and "compete head-to-head against China."
In a June 29 follow-up statement to Reuters, Jensen said ReElement was "still exploring options with the government," and that the loan structure had been modified based on mutual desire as the parties worked through the process. Jensen declined to elaborate on whether the company continued to seek a government loan or another form of financing, and he did not address specifics about the earlier due diligence requirements.
Partners, investments and potential cost implications
Vulcan has told Reuters its Pentagon loan remains on track, a status that administration officials confirmed. ReElement has not publicly disclosed a cost estimate for renovating a building in Marion, Indiana that is planned to house its proposed commercial facility.
Analysts and industry observers note that losing an inexpensive government loan could raise ReElement's effective borrowing costs, since federal lending typically offers lower interest rates than private-market alternatives. Earlier this year, Transition Equity Partners invested $200 million in ReElement, and Japan's Mitsubishi Materials agreed to acquire an undisclosed stake in the startup. Reuters' requests for comment to both firms did not receive responses.
A White House official declined to comment on the specific status of the $80 million loan, but said: "The Trump administration continues to explore different deal structures with ReElement to help strengthen America’s supply chains." The Department of Defense also declined to comment on the ReElement portion of the loan package.
Operational collaboration and congressional scrutiny
Under the public plans announced last year, ReElement and Vulcan would work in tandem: ReElement would process rare earths that Vulcan would then use to produce magnets at a targeted capacity of 10,000 metric tons per year for the Pentagon. "What we're trying to do is ensure that we create an entire ecosystem here in the United States," Vulcan CEO John Maslin said at the time the financing package was announced.
The $700 million financing package has drawn questions from Democratic lawmakers, who have probed whether Vulcan Elements' ties to Trump Jr. influenced the companies' selection for federal backing and sought information on whether proper review procedures were observed. Reuters said it could not determine whether Trump Jr. had any direct role in securing the financing. Vulcan declined to comment on the congressional scrutiny and Trump Jr. did not respond to requests for comment.
What remains unclear
Officials did not provide documentation detailing the due diligence shortcomings that prompted ReElement to drop pursuit of the $80 million conditional loan, and Jensen did not explain the specific compliance issues when questioned. The company has stated it remains in discussions with the government about alternative structures. Beyond those public statements and the investments previously disclosed, several details about the future financing and the Marion facility's renovation costs remain undisclosed.