A Beatrice startup with large aspirations failed to meet needed requirements to continue receiving funds from the city.
Rare Earth Salts, a multi-million dollar startup aiming to use new techniques to harvest rare earth elements from would-be mining waste, was previously green lit to receive LB840 funds.
The voter-approved funds, which are earmarked for economic development purposes, came with a series of stipulations, some of which were not met.
“My understanding is that they have not met the requirements for phase two or three of the project,” said City Administrator Tobias Tempelmeyer. “They’re still planning on doing everything they can to get the project up and running. With the deadline set, they were unable to fulfill those requirements.”
Two requests totaling $326,800 in funds were approved by the City Council last December.
The first request of $76,800 was for a year’s rent at the business campus in west Beatrice.
The location is being used for a wet/dry lab while another site for the conversion process is being selected. Rare Earth Salts had no requirements with this phase and will retain those funds.
The second request approved by the Council was for $250,000 to be distributed to Rare Earth Salts in three phases.
The first $100,000 was given to Rare Earth Salts when the application received final approval to assist in “speed to market” and be used for incentive packages to draw employees. There were no job or capital requirements with this phase.
The second phase of $75,000 was contingent on the company raising $6 million in capital by April 1, which the company failed to do. It also failed to create a required four additional jobs.
The final $75,000 would have been for creating four more jobs by July 1, 2015.
Tempelmeyer said the $150,000 that would have been given to Rare Earth Salts will return to the LB840 pool, and Rare Earth Salts will need to reapply for assistance if it wants another shot at the funds.
“I don’t think this is a fatal error by any means,” he said. “It’s a setback, yes, but not one they can’t overcome … Ultimately, it will just take more time to raise the capital than they originally thought.”
The vote to give Rare Earth Salts $76,800 in LB840 funds for the building lease was approved by the Council 5-2, with Councilmen Ted Fairbanks and Rich Kerr voting in opposition. The second request totaling $250,000 was approved with the same vote.
Mayor Stan Wirth still has faith the company will grow in Beatrice, and said it's still active at the business campus, which has been essentially unoccupied for more than a decade.
“They still have individuals out there working and even though they haven’t met the employment requirements, it’s great to have the remaining portion of that building occupied and folks there working.”
Rare Earth Salts CEO Allen Kruse has stated the company plans to use new techniques to harvest rare earth elements from would-be mining waste around the world.
He claims the company can extract trace amounts of the elements, which are used in items from cell phones to televisions, from the waste.
Kruse told the Citizens Advisory Review Committee last December it would take an estimated $10 million to get a pilot program up and running, before a long-term commercialization of the process. At that time, he said $3 million had been raised.
Calls to Kruse for comment were not returned Friday.
Kruse has worked with the NGage economic development group in the LB840 application process.