- The Pentagon is weighing whether to cancel an $80 million conditional loan to ReElement Technologies Corp., part of a broader $1.4 billion critical-minerals deal, after officials raised doubts about the company’s ability to scale its technology and its long-term revenue forecasts.
- The potential pullback has ignited a public fight between Peter Navarro, who called the Pentagon’s vetting process “over-burdensome,” and the Defense Department, which defended its due diligence as essential to protecting taxpayer money and mission success.
- ReElement — which was in a “pre-revenue development stage” as recently as October 2025 — was meant to produce rare earth oxides from electronic waste and end-of-life magnets for use in defense applications; the company says its Indiana facility is still moving forward.
- The dispute exposes the central tension in the Trump administration’s critical-minerals push: the White House wants to move at “warp speed” on bets against China’s supply chain dominance, while Defense officials insist rigorous vetting is necessary to ensure deals actually deliver.
What Happened?
The Pentagon’s Office of Strategic Capital announced an $80 million conditional loan to ReElement Technologies in November as part of a $1.4 billion critical-minerals package that also included Vulcan Elements Inc. Since then, internal due diligence has raised red flags about ReElement’s ability to scale its rare-earth oxide refining technology and whether its long-term revenue projections are credible. The loan has not been canceled and no funds have been disbursed, but the process has deteriorated into an open inter-agency fight. After Bloomberg reached out to ReElement, White House trade adviser Peter Navarro called to criticize the Pentagon’s “private equity background” vetting team, calling ReElement “exactly the kind of asymmetric bet we should be making.” The Pentagon fired back, calling its dealmakers “the finest private equity professionals in the world.”
Why It Matters?
Rare earth elements are a critical chokepoint in US defense and technology supply chains — used in everything from missiles to electric motors — and China currently controls the dominant share of global refining capacity. The Trump administration has made breaking that dependency a national security priority, using loans, equity stakes, and warrants across hundreds of deals. But the ReElement situation illustrates the inherent tension between urgency and rigor: moving fast means accepting more risk, and the government’s early endorsement of ReElement already helped the company raise $200 million in private funding from Transition Equity Partners. If the loan is pulled after that private capital was effectively crowded in on the back of a government commitment, it raises uncomfortable questions about credibility.
What’s Next?
The ReElement deal could still proceed — the Pentagon has not made a final decision. But the public nature of the Navarro-Pentagon clash suggests the stakes are political as much as financial. Watch for whether Deputy Defense Secretary Stephen Feinberg, the Cerberus Capital co-founder overseeing the critical minerals effort, intervenes to resolve the standoff. More broadly, the episode will test whether the administration can maintain dealmaking discipline across the hundreds of critical-mineral transactions currently in its pipeline without letting political pressure override financial due diligence.
Source: Bloomberg
