White House and Pentagon at odds over minerals loan

(ECNS) - The Pentagon is weighing whether to scrap an $80 million conditional loan to rare earths refiner ReElement Technologies, exposing divisions inside the Trump administration as Washington races to reduce U.S. dependence on China for critical minerals, according to media reports.

The loan, announced in November by the Pentagon's Office of Strategic Capital (OSC), was part of a broader $1.4 billion critical minerals initiative aimed at building a domestic supply chain for rare earth materials used in fighter jets, missiles, electronics and energy technologies.

The effort reflects growing concern over China's dominance of the global rare earth industry, particularly after it adjusted export policies on key minerals and technologies amid trade tensions with the United States.

Pentagon officials reviewing the ReElement deal questioned the company's ability to scale its refining technology and generate long-term revenue, according to people familiar with the matter. The loan has not been canceled, though no funds have been disbursed.

The dispute highlights a broader struggle inside the Trump administration between officials who want to move quickly to counter China and others insisting on stricter financial and technical reviews before taxpayer money is committed.<br/>Peter Navarro, the White House senior counselor for trade and manufacturing, criticized Pentagon officials overseeing the review process.

"The due diligence cops within OSC with a private equity background have no experience how to manage a crisis at warp speed," he said, adding that "over-burdensome due diligence disproportionately penalizes small innovative emerging companies." He called ReElement "exactly the kind of asymmetric bet we should be making."

Pentagon spokesman Sean Parnell defended the agency's approach, saying OSC "expertly balances lightning speed with rigorous diligence" to secure deals that strengthen U.S. defense capabilities.

ReElement CEO Mark Jensen said the company's work with the U.S. government was continuing and that it was moving ahead with plans for a facility in Indiana to refine critical minerals and produce rare earth oxides.

The episode underscores the challenges Washington faces in trying to build a rare earth supply chain independent of China, despite billions of dollars in government support and growing geopolitical pressure to secure critical mineral supplies domestically.

（By Zhang Jiahao）