Pentagon Questions the Loan Qualifications of Rare Earth Minerals Companies, Internal Disagreements Erupt between the White House and the Department of Defense

According to Bloomberg, the Pentagon is evaluating whether to withdraw its $80 million conditional loan commitment to rare earth refining company ReElement Technologies Corp., a move that has sparked public friction between the White House and the Department of Defense, adding uncertainty to the Trump administration's established strategy to break China's dominance in critical minerals.

The Pentagon Strategy Capital Office (OSC) announced the aforementioned agreement in November last year, as part of a total $1.4 billion critical minerals agreement, with the other participant being Vulcan Elements Inc. The plan was positioned as an important initiative by the Trump administration to promote domestic production of rare earths and reduce dependence on China.

However, according to informed sources, Pentagon reviewers have since raised doubts about ReElement's ability to scale up its technology and its long-term revenue forecasts, prompting authorities to re-examine the loan. The loan has not been disbursed yet, and the agreement has not been officially canceled.

White House Senior Advisor for Trade and Manufacturing, Peter Navarro, immediately took the initiative to contact Bloomberg to publicly criticize the Pentagon's handling of the situation. "The due diligence personnel within OSC with a private equity background simply do not have experience in dealing with crises at lightning speed," Navarro said, "Their overly cumbersome due diligence requirements disproportionately punish small innovative emerging companies. ReElement is exactly the kind of asymmetric bet we should place our bets on."

Pentagon spokesman Sean Parnell defended the team, calling them "the world's best private equity deal-makers," and stated that the Strategy Capital Office "strikes a perfect balance between the speed of lightning and strict due diligence to push high-value deals to fruition." The critical minerals strategy is spearheaded by Deputy Secretary of Defense Stephen Feinberg, who is the co-founder of private equity giant Cerberus Capital Management.

ReElement's CEO, Mark Jensen, did not directly comment on the loan issue but stated that the company would continue to advance its plan to build critical minerals refining and rare earth oxide production facilities in Indiana. "No other company in the United States is able to or already producing the products we produce today, and these products are indispensable for defense, commerce, and energy transition," Jensen said.

ReElement was a subsidiary of Nasdaq-listed American Resources Corp. until last year, which described ReElement in a document from October 2025 as being in the "pre-revenue development stage." In February of this year, the State Department publicly stated that the Pentagon's support had "leveraged" an additional $200 million in private financing for ReElement, which apparently referred to the $200 million strategic equity investment from Transition Equity Partners that ReElement announced in January.

This disagreement reflects the structural tension within the Trump administration between "speedy betting" and "strict scrutiny" on the critical minerals strategy. The Pentagon is currently evaluating hundreds of similar projects, and the ReElement case may have a demonstration effect on the pace of subsequent transactions.