US signs $725 million loan pact with Energy Fuels to boost domestic rare earth production

The U.S. government signed a $725 million conditional loan commitment with Energy Fuels to boost domestic processing of rare earth elements as part of its efforts to reduce reliance on China.

Energy Fuels, which specializes in uranium production, will expand its operations into rare earth separation and metallization, which is crucial for the production of permanent magnets, the U.S. Department of War’s Office of Strategic Capital (OSC) said in a release.

Over the last year, several countries, including the U.S., have stepped up investments in rare earth mining and processing following China’s move to curb exports of rare earth magnets.

Ross Bhappu, President and Chief Executive Officer of Energy Fuels, said: “This important financing support from key investors aligns with Energy Fuels’ objective to be a vital player in the rare earths supply chain. The United States government has been steadfast in its support of critical materials security, and we appreciate the OSC’s financial support at this important time as we develop our vertically integrated supply chain.”

Bhappu continued, “Recent events have underscored the urgency of building durable, transparent and allied supply chains for critical materials. Energy Fuels is strategically positioned to lead that objective, with deep technical expertise and a strategy that encompasses multiple links on the critical materials value chain. We are proud to play a role in strengthening industrial resilience and supporting the long-term security and competitiveness of the United States and its allies.”

Energy Fuels must fulfill financial, legal, technical and other due diligence requirements, as part of the conditional loan agreement, the OSC said, without elaborating on the requirements.

The company’s increased production of rare earth magnets “will directly support permanent magnet facilities across the broader U.S. industrial base and improve supply chains for other specialty defense and industrial products,” the OSC said.

The conditional OSC financing, together with other project-level financing discussions, is expected to provide Energy Fuels with additional long-term capital flexibility as it advances its rare earths and critical materials initiatives. The Company intends to use proceeds from the finalized financing to support eligible project development, processing capacity, supply chain integration, working capital and other strategic priorities, consistent with the terms of the applicable financing arrangements.

(Reporting by Mike Stone in Washington and Nandan Mandayam in Bengaluru; Editing by Shinjini Ganguli)