The Pentagon’s Office of Strategic Capital has extended a conditional commitment for $500 million in long-term debt financing to Phoenix Tailings Inc., a Massachusetts-based mining startup. The funds are intended to support the construction of a rare-earth processing facility designed to bolster domestic production capacity.

Phoenix Tailings aims to develop a plant capable of processing various feedstocks, including concentrates, recycled materials, and secondary sources, to produce both light and heavy rare-earth metals. These metals are critical components in a range of technologies, such as magnets used in electric vehicles, wind turbines, and defense systems.

The loan is part of a broader $1 billion financing effort targeting the expansion of rare-earth separation and production capabilities within the United States. This initiative seeks to reduce reliance on foreign supply chains by addressing a significant bottleneck in midstream processing—the phase between mining or recycling rare earths and manufacturing end-use products.

The startup projects that initial operations at the facility could begin as early as 2028, although the loan’s final approval is contingent upon the completion of financial, legal, technical, and other due diligence processes. Phoenix Tailings has emphasized that these conditions must be met before the commitment can be finalized.

This move aligns with broader government efforts to secure and diversify rare-earth supply chains amid growing geopolitical concerns and the increasing demand for critical minerals vital to the high-tech and defense sectors.