Critical Metals in line for $120M US loan for Greenland rare earth project

Critical Metals (Nasdaq: CRML) says it’s been tapped for a U.S. government loan worth up to $120 million to fund the company’s Tanbreez rare earth project in southern Greenland, 

The $290-million capital cost Tanbreez project — situated on a 4.7-billion-tonne mineralized kakortokite unit that has been largely unexplored — represents one of the world’s largest rare earth deposits. It has a stated capacity of 85,000 tonnes per year of rare earths concentrate, around double America’s current rare earth concentrate production capacity, according to a note on Monday from BMO Capital Markets. 

“If approved, this would be the Trump administration’s first overseas investment in a mining project,” BMO mining analyst Helen Amos said. “[It] follows recent executive actions focused on critical minerals including a Section 232 investigation order [on whether imports threaten national security] in April and an executive order to streamline permitting of critical minerals projects in March.”

In a letter issued last week by the U.S. Export-Import Bank (EXIM), the New York-based Critical Metals has met the initial requirements to apply for the $120-million loan, which would have a 15-year repayment term.

The project would have to be “well-capitalized with sufficient equity from strategic investors” to receive the loan, EXIM stated in the letter of interest.

2026 production

The EXIM funds would be used for technical work ahead of first production by 2026. Once operational, the Tanbreez mine is expected to scale up to 425,000 tonnes following a modular expansion. Its mining licence is valid until 2050.

The production forecast is based on an estimated resource of 45 million tonnes, or just 1% of the host rock. According to company estimates, the Tanbreez resource has one of the largest heavy rare earth contents (dysprosium, terbium, and yttrium) globally. It makes up 27% of the project’s total rare earth oxide content.

Earlier this year, Critical Metals released an economic assessment for the Tanbreez project, showing a net present value of about $3 billion (approximately $2.8 billion to $3.6 billion at discount rates of 15% and 12.5%, respectively, before tax) and an internal rate of return of 180%.

The company expects to complete a definitive feasibility study for Tanbreez, which would include more details such as project timelines, by the end of this year.

In addition, Critical Metals said it expects to invest another $10 million in exploration this year, so that it would trigger the option to acquire an additional 51% of the asset, bringing its total ownership to 93%.

Battle for rare earths

EXIM, acting as the U.S. government’s export credit agency, said in the letter that CRML qualifies for its loan program since its business competes with China.

Rare earths — a group of 17 minerals used in high-tech industries ranging from electric vehicles to defence systems — have become a focal point in the recent Sino-American trade clash, given Beijing’s leverage as the leading producer and exporter to Washington.

China currently controls roughly 60% of rare earth production and nearly all of the processing capacity worldwide. As of 2023, its total mine production was 240,000 tonnes, nearly six times that of the US. Between 2020 and 2023, China accounted for about 70% of America’s rare earth imports.

This heavy reliance on Chinese supply — which Beijing managed to weaponize in trade policy — sparked a global hunt for new rare earth mines. As of now, the U.S. only has one active rare earth mine — the Mountain Pass in California owned by MP Materials (NYSE: MP).

Interest in Greenland

Should the EXIM loan be approved, Tanbreez would become the first overseas mining project to receive U.S. government funding under the Trump administration.

The letter underscores U.S. interest in Greenland’s vast endowment of resources and critical minerals dating back to the Biden administration. It was reported that U.S. officials visited Nuuk as recently as last November as part of ongoing efforts to get private investment in the island’s mineral sector. According to Reuters, US officials had lobbied Tanbreez’s then-owner not to sell to a Chinese developer and instead sell to Critical Metals.

President Donald Trump has also made no secret of his desire to “own” the Danish territory. Earlier this year, Vice President JD Vance made a quick trip to Greenland to make Trump’s pitch.

Despite growing interest, Greenland’s mining sector has seen little progress in recent years due to limited investor interest, bureaucratic challenges and environmental concerns. Currently, there are only two small mines in operation.

As for Critical Metals, the company would still have to build a processing facility, and its representatives said their goal is to process the material inside the US. The company had previously applied for funding to develop a processing facility from the U.S. Department of Defense, but the review process stalled ahead of Trump’s inauguration.

For the EXIM loan’s additional funding requirements, Critical Metals told Reuters it is considering offtake agreements, royalty streams and funding from other U.S. governmental agencies.