The Pentagon has approved a $500 million loan to Phoenix Tailings, a New Hampshire-based refinery, to expand its capacity to process critical minerals from mining waste—a key step in reducing U.S. reliance on China for materials used in military weapons and high-tech applications.
The company, which uses electrolysis to separate rare earth elements from mine tailings, will use the funds to build a new factory within 14 to 18 months, according to company and government sources. The expansion aims to address urgent supply chain vulnerabilities exposed by the ongoing conflict in the Middle East, where critical minerals are essential components in weapons such as Tomahawk cruise missiles, THAAD interceptors, and F-35 fighter jets.
Phoenix Tailings, founded eight years ago as a backyard lab, now operates in an office park in Exeter, New Hampshire. Workers process mining waste stored in 1-ton bags, extracting elements like neodymium and dysprosium—key ingredients in high-powered magnets used in defense and technology sectors. The company’s chief commercial officer, Anthony Balladon, described the task as a “tall order,” noting the challenge of scaling up production to meet both defense demands and new regulations banning military contractors from sourcing critical minerals from China.
Regulatory and Industry Context
The Pentagon’s loan is part of a broader push by the Trump administration to rebuild the U.S. supply chain for critical minerals, which are currently dominated by China. The White House has imposed stricter rules requiring military contractors to phase out Chinese-sourced components, accelerating efforts to develop domestic alternatives. However, industry analysts caution that even with accelerated efforts, most new U.S. mines are years away from production, making short-term solutions—like reprocessing existing mine waste—essential.
Phoenix Tailings’ approach focuses on extracting minerals from waste rather than opening new mines, a method that could provide immediate relief while longer-term solutions are developed. The company’s expansion is expected to significantly boost its separation and metallization capacity, a particularly weak link in the U.S. mines-to-magnets supply chain.
Industry Challenges and Long-Term Outlook
While the loan and regulatory pressure signal a shift in U.S. strategy, experts warn that scaling up domestic production will take time. The industry faces hurdles such as securing permits, attracting investment, and competing with established global suppliers. Balladon emphasized that multiple companies will likely need to scale up similar operations to meet growing demand.
The urgency of the situation has been underscored by the depletion of munitions stocks in the Middle East, where conflicts have accelerated the need for rapid replenishment. Military contractors are now required to comply with new sourcing rules, creating additional pressure on domestic producers to deliver results quickly.
Phoenix Tailings’ project represents one of several government-backed initiatives to secure critical mineral supplies. The company’s work highlights both the potential and limitations of near-term solutions in addressing long-standing supply chain vulnerabilities.