The production of permanent magnets used in advanced U.S. defence systems has long been at risk due to a global bottleneck in the critical “midstream” phase—the gap between raw material extraction and finished product. To address this vulnerability and expand domestic rare earth element processing capacity, the Pentagon’s Office of Strategic Capital (OSC) has signed a conditional loan commitment worth $725 million with Energy Fuels, Inc.
This public-private partnership will enable the construction of a state-of-the-art rare earth separation and metallization facility on U.S. soil, combining government investment with private sector capital.
Closing the Supply Chain Gap
Energy Fuels, which previously specialized in uranium production, is now expanding into rare earth separation and metallization with this financing support. The midstream phase—which demands highly specialised technical expertise—will bridge the gap between raw ore extracted from mines and the permanent magnets essential for everything from military radar systems to missile guidance kits. Increased production at the company’s White Mesa Mill facility will supply U.S. magnet manufacturing plants, thereby securing the supply chain for strategic defence products.
Related News & Analysis: Rare Earth Element Dependency in the Defence Industry
“A National-Scale Bottleneck Is Being Addressed”
Sharing technical and strategic details on the investment, David A. Lorch—Senior Advisor to Steve Feinberg, Director of the Office of Strategic Capital and Deputy Secretary of Defence—stated: “OSC places a high priority on supporting domestic processing of critical minerals and rare earth elements. Energy Fuels’ expansion into rare earth midstream activities is a significant solution to a national-scale bottleneck that demands urgent attention. This support marks an important step toward strengthening the entire supply chain from mine to magnet.”
Emil Michael, Under Secretary of Defence for Research and Engineering, emphasised that the partnership represents an aggressive move to close gaps in the industrial base and will make the U.S. rare earth supply chain more resilient against external disruptions.
Due Diligence Underway for Financial Close
Before the conditional loan commitment can proceed to final financial close, Energy Fuels must complete certain legal procedures. Under the agreement, the company will move toward loan disbursement after fulfilling financial, legal, technical, and environmental due diligence requirements.
The Office of Strategic Capital—which plays a central role in localising critical technologies—has accelerated its debt financing strategies in fiscal year 2026. Having committed over $5 billion in debt financing during this period, the office has successfully channelled more than $11 billion in total capital—from both public and private sources—into the U.S. industrial base.
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Source: C4Defence
