Highlights
- The U.S. Office of Strategic Capital (OSC) provides loans and support to rebuild critical technology supply chains across 31 strategic sectors.
- OSC focuses on rare earth element projects to enhance national security and reduce dependence on foreign suppliers.
- The initiative aims to attract private capital, accelerate commercialization, and strengthen the U.S. industrial base through targeted investment strategies.
The U.S. Office of Strategic Capital (OSC), established within the Department of Defense in December 2022, is emerging as one of the most consequential federal tools for rebuilding and securing America’s critical technology supply chains. Formally codified by Congress in the FY2024 National Defense Authorization Act, OSC wields new authorities to provide loans, loan guarantees, and technical assistance to companies in 31 designated technology categories vital to national security—ranging from microelectronics and advanced manufacturing to rare earth elements (REEs). Its mission (opens in a new tab) is to attract and scale private capital into sectors where the U.S. must reduce foreign dependence, close strategic chokepoints, and outpace competitors such as China. By leveraging its federal credit programs, OSC can lower the cost of capital for high-impact projects, accelerate commercialization-to-production timelines, and catalyze public-private investment strategies that strengthen the industrial base.
In the rare earth sector—where supply security is both an economic and defense imperative—OSC’s role could prove pivotal in restoring domestic mining, refining, and magnet manufacturing capacity.
How is the U.S.OSC working to spur the U.S. rare earth (REE) companies and projects? OSC’s FY2025 priority segments are listed below, highlighting how each aligns with OSC’s credit-based support opportunities.
Leading U.S. Rare Earth Players and Projects
1. MP Materials – Mountain Pass Mine & Downstream Refining
- What they do: Own and operate the only active U.S. rare earth mine at Mountain Pass, CA. Produces NdPr and has launched refining and NdFeB magnet production via its Fort Worth, TX facility.
- Recent activity: Record output in Q2; Pentagon deal provides price floor, and DoD is becoming its largest shareholder. Apple also committed $500M for magnet recycling and domestic magnet manufacturing lines.
- OSC alignment: Strong fit with Microelectronics Materials, Advanced Manufacturing, and Advanced Bulk Materials—ideal for OSC’s equipment finance support to scale magnet production.
2. USA Rare Earth – Round Top Mine & Magnet Manufacturing
- What they do: Developing Round Top deposit (Texas) and building magnet manufacturing facility in Stillwater, OK, aiming for commercial scale (~5,000 metric tons annually by 2026).
- OSC alignment: Checkboxes across Microelectronics Materials, Advanced Manufacturing, and Advanced Bulk Materials—strong candidate for equipment-finance lending.
3. Ucore Rare Metals – Louisiana Refining (RapidSX™)
- What they do: Developing a commercial REE separation/refining facility in Louisiana using RapidSX technology. Received $4M (Phase 1) and $18.4M (Phase 2) DoD funding.
- OSC alignment: Perfect match for Microelectronics Materials and Advanced Bulk Materials; refining-based operations ideal for enhancing U.S. supply chain resilience.
4. Ramaco Resources – Brook Mine, Wyoming
- What they do: Discovered a significant REE deposit (~1.7 million tons—a company estimate) at Brook Mine. Aims to mine coal to fund rare earth extraction; seeking federal support for processing.
- OSC alignment: Strong potential under Advanced Bulk Materials and Advanced Manufacturing, especially if processing/refining operations are established.
5. Vulcan Elements – Rare-Earth Magnet Maker (NC)
- What they do: Produces rare-earth magnets in Durham, NC, with no Chinese sourcing; planning large-scale plant by decade's end. Holds U.S. military contracts.
- OSC alignment: Aligns with Advanced Manufacturing and Microelectronics Materials—ideal for equipment financing to scale magnet output.
6. DOE-Funded Processing Plant – High-Purity REO Production
- What it is: A full-scale integrated facility for extraction, separation, and refining of REEs. Funded by DOE (~$24M), expected to yield high-purity NdPr oxide.woodplc.com (opens in a new tab)
- OSC alignment: Fits under Advanced Bulk Materials and Advanced Manufacturing; further capacity expansion would benefit from OSC loan support.
Summary of Projects
| Company / Project | Stage / Capability | OSC FY2025 Focus Area | OSC Opportunity |
| MP Materials | Mine → Refined REOs → Magnets | Microelectronics Materials / Adv. Mfg. | Scale plant capacity via equipment finance |
| USA Rare Earth | Mining → Magnet Mfg. | Same as above | Support OK facility with ramp-up via loans |
| Ucore Rare Metals | REE Separation (Refining) | Microelectronics Materials / Adv. Bulk Mat. | Fuel refining buildout with OSC financing |
| Ramaco Resources (Brook Mine) | Mine exploration | Adv. Builk Materials/Adv. Mfg | Fund infrastructure, processing capabilities |
| Vulcan Elements | Magnet Manufacturing (NC) | Adv. Mfg. / Microelectronics Materials | Easier facility expansion with OSC tools |
| DOE Processing Plan | Extraction & Separation | Adv. Bulk Materials / Adv. Mfg. | Complement with OSC credit-based lending |
How to Leverage OSC’s FY2025 Investment Strategy
- Equipment Finance: Apply for loans ($10M–$150M) to scale processing, separation, and magnet manufacturing assets.
- Chokepoint Mitigation: Projects like Ucore and Ramaco targeting refining can help eliminate reliance on Chinese supply chains.
- Portfolio Impact: A balanced investment across mining, refining, and end-products (magnets) delivers national security impact across near, medium, and long-term horizons.
- Public-Private Synergy: Many of these companies already intersect with DoD and DOE interests—OSC can amplify that momentum.
Risk Factors
U.S. rare earth reindustrialization faces a web of interlocking risks that can derail even well-financed projects. Chief among them is market volatility: rare earth element (REE) prices can whipsaw with changes in Chinese export policy, demand cycles, or deliberate undercutting, threatening the viability of domestic refining and magnet production before plants hit steady-state output. Capital intensity compounds the danger—mines, refineries, and downstream facilities require hundreds of millions in investment, and even with OSC loans, projects can stall if private capital retreats without firm offtake commitments. Adding to the uncertainty, unproven separation or magnet-making technologies can falter at scale, forcing costly retrofits if they fail to meet defense-grade specifications.
Beyond market and technical hurdles, physical supply chain fragility looms large. Many U.S. ventures still depend on imported reagents, specialized equipment, or intermediate REE products, meaning a disruption—whether logistical, political, or commercial—can halt progress. Regulatory and ESG headwinds present another brake: environmental reviews, community pushback, or litigation can freeze development timelines, putting OSC-backed loan repayment schedules at risk. Meanwhile, strategic competitors can counter with price suppression, export controls, or diplomatic pressure on allied suppliers, aiming to destabilize U.S. projects before they mature.
Finally, execution risk and shifting demand patterns can undermine long-term viability. Poor management, cost overruns, or a shortage of skilled technical talent can delay commissioning, triggering contractual breaches. This latter point is a concern not usually discussed, but frequently so on Rare Earth Exchanges. This would be an example of how industrial policy at the federal level would trigger all sorts of programs to develop a workforce ready for a rare earth element supply chain boom.
Note another area we are watching is the yanking of green energy incentives via the Big Beautiful Bil. If EV adoption slows, defense priorities shift, or alternative technologies emerge, demand for certain REEs could soften, leaving high-capacity facilities underutilized.
The bottom line: even with OSC’s favorable financing, these projects must secure durable offtake, manage technological and operational execution with precision across the value chain, and shield themselves from geopolitical manipulation. Without such discipline, capital could be stranded, and America’s rare earth supply chain resilience compromised.
What about the metal and alloy makers which may now be the chokepoint for US within-borders RE value chains? Apparently, MP is doing its own thing here in TX, along with magnet making while REalloys is also making moves.
How will the likes of E-VAC and Star Group supply their US magnet facilities? Will they build their own metals facilities, or will the US look to bring in recognized ROW makers such as LCM or ASM (we hold)?
Maybe an issue for REEx to do a presentation on as it represents probably the least discussed stage of the RE value chain, yet vital? GLTA – REI