The Office of Strategic Capital (OSC), a finance organization within the United States Department of War, has issued a $500 million conditional loan commitment to Phoenix Tailings, Inc., a U.S.-based rare earth metals production company (U.S. Department of War, 2026a). The financing is intended to support the construction of a new rare earth separation and metallization facility, known as the Freedom Facility, and expand the company’s existing domestic processing capabilities (Phoenix Tailings, 2026).
This loan is part of an approximately $1 billion comprehensive financing initiative involving both the OSC and private capital (U.S. Department of War, 2026a). The Freedom Facility, targeted for initial operations in 2028, is designed to process diverse feedstocks, including concentrates and recycled materials, to produce light and heavy rare earth metals without reliance on foreign-controlled supply chains (Phoenix Tailings, 2026). Phoenix Tailings currently operates metallization facilities in Burlington, Massachusetts, and Exeter, New Hampshire (Phoenix Tailings, 2025).
The OSC was established by the Secretary of Defense in December 2022 to attract and scale private capital for technologies critical to national security (Office of Strategic Capital, 2025). The office’s funding authority was expanded under the One Big Beautiful Bill Act, signed into law on July 4, 2025, which provided $500 million in credit subsidy funding to create up to $100 billion in available loan funds for critical minerals production (U.S. Department of War, 2025). The OSC is directed by David A. Lorch, who also serves as a Senior Advisor to Deputy Secretary of War Steve Feinberg (U.S. Department of War, 2026b). Emil Michael currently serves as the Under Secretary of War for Research and Engineering, overseeing technology and research initiatives (U.S. Department of War, n.d.).
In addition to the OSC loan commitment, Phoenix Tailings was selected in June 2026 to receive a $66 million grant from the U.S. Department of Energy’s Rare Earth Demonstration Facility Program (GlobeNewswire, 2026). This grant is part of a $147.8 million project, in partnership with the Massachusetts Institute of Technology (MIT) and the University of Minnesota, to advance commercial deployment of the company’s rare earth separation technology (GlobeNewswire, 2026).
The midstream rare earth supply chain—specifically separation and metallization—is a critical link between raw extraction and permanent magnet production (U.S. Department of War, 2026a). China currently dominates global rare earth processing, refining a significant majority of the world’s materials (Massachusetts Institute of Technology, 2024). The OSC’s investment in Phoenix Tailings aims to build a resilient domestic supply chain for rare earths, supporting permanent magnet facilities and the broader U.S. defense industrial base (U.S. Department of War, 2026a). In fiscal year 2026, the OSC committed over $5 billion in debt financing to support the American industrial base (U.S. Department of War, 2026c).
References
GlobeNewswire. (2026, June 4). Phoenix Tailings Awarded $66 million Department of Energy Grant to Accelerate American Rare Earth Processing. Markets Insider. Phoenix Tailings Awarded $66 million Department of Energy Grant to Accelerate American Rare Earth Processing | Markets Insider
Massachusetts Institute of Technology. (2024, November 8). Startup turns mining waste into critical metals for the U.S. MIT News. Startup turns mining waste into critical metals for the U.S. | MIT News | Massachusetts Institute of Technology
Office of Strategic Capital. (2025, January 2). Fiscal Year 2025 Investment Strategy for the Office of Strategic Capital. U.S. Department of Defense. https://media.defense.gov/2025/Jan/02/2003623435/-1/-1/1/FY25-INVESTMENT-STRATEGY-FOR-OFFICE-OF-STRATEGIC-CAPITAL.PDF
Phoenix Tailings. (2025, October 23). Phoenix Tailings Opens Cutting-Edge U.S. Rare Earth Metallization Facility Entirely Independent From China. Phoenix Tailings Opens Cutting-Edge U.S. Rare Earth Metallization Facility Entirely Independent From China | Phoenix Tailings
Phoenix Tailings. (2026, June 16). U.S. Department of War helps launch an ~$1B Initiative with Phoenix Tailings to Rebuild America’s Rare Earth Industrial Base. U.S. Department of War helps launch an ~$1B Initiative with Phoenix Tailings to Rebuild America’s Rare Earth Industrial Base | Phoenix Tailings
U.S. Department of War. (n.d.). DoW Research & Engineering, OUSW(R&E). Retrieved June 22, 2026, from https://www.cto.mil/
U.S. Department of War. (2025, August 10). Office of Strategic Capital Announces First Loan Through DoD Agreement With MP Materials to Secure Critical Materials Supply Chain. https://www.war.gov/News/Releases/Release/Article/4270722/office-of-strategic-capital-announces-first-loan-through-dod-agreement-with-mp/
U.S. Department of War. (2026a, June 16). Office of Strategic Capital Signs $500 Million Conditional Loan Commitment With Phoenix Tailings. https://www.war.gov/News/Releases/Release/Article/4517853/office-of-strategic-capital-signs-500-million-conditional-loan-commitment-with/
U.S. Department of War. (2026b). David Lorch. https://www.war.gov/About/Biographies/Biography/Article/4506870/david-lorch/
U.S. Department of War. (2026c, June 18). The Department of War’s Office of Strategic Capital Signs $725 Million Conditional Loan Commitment With Energy Fuels, Inc. https://www.war.gov/News/Releases/Release/Article/4520819/the-department-of-wars-office-of-strategic-capital-signs-725-million-conditiona/
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