Key Takeaways:
The Pentagon's latest bet on a small Indiana refiner marks the sharpest escalation yet in America's campaign to dismantle China's stranglehold on the minerals that power its most advanced weapons.
China controls 98% of global gallium supply and roughly 60% of germanium — two materials essential to every F-35 radar, Patriot missile battery, and night-vision system in the U.S. arsenal. The Pentagon on Monday invested $25 million in ReElement Technologies to build domestic refining capacity for both.
"Strengthening our domestic refining capacity for rare earth elements and other critical minerals is a national security imperative," Michael Cadenazzi, assistant secretary of war for industrial base policy, said in the announcement. "This investment actively rebuilds a domestic, mine-to-magnet supply chain."
The investment, executed by the Department of War's Economic Defense Unit in partnership with the Office of the Under Secretary of War for Acquisition and Sustainment, will fund equipment installation and working capital at ReElement's 400,000-square-foot Marion, Indiana campus. The facility uses a patented chromatography-based separation process — developed at Purdue University over roughly 40 years — to refine end-of-life magnets and recycled industrial scrap into high-purity rare earth oxides, yttrium, gadolinium, germanium and gallium. ReElement projects annualized separation capacity of 500 metric tons of germanium dioxide by year-end, more than four times current U.S. demand of roughly 90 to 120 metric tons.
The investment comes three days after Reuters reported ReElement had abandoned a separate $80 million Pentagon loan after failing to satisfy federal due diligence requirements. The shift from loan to direct investment — funded through the Industrial Base Fund rather than the Office of Strategic Capital — reflects the urgency of a supply chain where China has progressively tightened controls since August 2023, when Beijing imposed licensing requirements on gallium and germanium exports. Rotterdam spot gallium prices reached $687 per kilogram by May 2025, up more than 150% from pre-control levels, according to CSIS data.
China's Escalating Export Controls
Beijing's strategy has been precise and progressive. After the initial licensing regime in July 2023, China issued an explicit ban on gallium, germanium and antimony exports to the United States in December 2024 — formalizing what had already become a de facto embargo. In October 2025, it extended controls beyond physical minerals to govern the refining technology and process knowledge itself, asserting jurisdiction over foreign-made products containing Chinese-origin rare earth inputs, according to a Global Trade Alert analysis.
The United States has zero domestic primary gallium production and no meaningful government stockpile. The one prior attempt — the Apex Mine in Utah, reopened in the 1980s — closed within two years. Gallium occurs only at trace concentrations in the earth's crust, recovered almost exclusively as a byproduct of aluminum and zinc smelting, meaning new primary supply requires building entire processing value chains for host metals.
ReElement's Technology and the Scaling Question
ReElement's Ligand Assisted Displacement chromatography uses columns packed with sorbent materials to separate dissolved metal ions in sequence, with lighter elements eluting first and heavier elements last. The company reports achieving 99.5% purity or above — with some germanium outputs exceeding 99.9% — using aqueous chemistry with near-zero wastewater discharge. It claims up to 100 times greater efficiency and 80% less waste compared to conventional solvent extraction, the method China's state-linked refineries have spent decades perfecting.
Those claims have not been independently audited at commercial scale. Rare Earth Exchanges, an industry research service, has noted that scaling chromatography from pilot to industrial volumes is "notoriously difficult," and Pentagon officials vetting the earlier $80 million loan raised concerns about whether ReElement could deliver its performance targets at full production. The Marion campus's first production line — focused on germanium and related strategic materials — is targeting commercial operations this quarter and will provide the first real-world test.
The Broader Pentagon Push
Monday's $25 million investment is one element in a larger critical minerals spending campaign. The Pentagon offered a $725 million conditional loan to Energy Fuels for uranium and rare earth processing in June, committed $500 million to Phoenix Tailings for rare earth separation and metallization, and invested $27 million in antimony domestic extraction in March. ReElement is the first publicly confirmed recipient of a direct Pentagon investment specifically targeting gallium and germanium refining.
The company has assembled a commercial ecosystem alongside government backing. South Korea's POSCO International signed a joint venture agreement in May 2026 for rare earth separation and purification in the United States. Transition Equity Partners committed a $200 million equity facility in late 2025. Japan's Mitsubishi Materials holds an undisclosed stake. Electronics Recyclers International, the largest U.S. electronics recycler, signed a commercial processing agreement to aggregate end-of-life magnet materials through its eight recycling centers.
Peter Navarro, White House senior counselor for trade and manufacturing, framed the investment in a Wall Street Journal op-ed as analogous to the fracking revolution that transformed America into an energy superpower. "ReElement-style refining innovation can do the same for critical minerals — unlocking domestic and allied supply, lowering costs, reducing waste and breaking China's choke hold," he wrote.
The risk picture carries caveats. American Resources Corp., the publicly traded parent that holds a minority stake in ReElement, received a going concern notation in its first-quarter 2025 financial filings and later received a Nasdaq notice for delayed filing of its quarterly report. ReElement itself is a separate entity pursuing a potential public listing, and the $25 million Pentagon investment goes directly to ReElement, not through AREC.
This article is for informational purposes only and does not constitute investment advice.
