How the Trump administration sought to rebuild the critical mineral supply chain

In recent months, China has tightened its grip on the supply chain, raising national security concerns, as both critical minerals and rare earths are used in a range of defense applications, including fighter jets, missiles, and night vision. Critical minerals and rare earths are also used in the energy sector for wind turbines and batteries. Even everyday items, such as smartphones, smartwatches, and blenders, need minerals.

​Against this backdrop, the Trump administration began pursuing a series of policy changes to expand the U.S. supply chain for critical minerals, including taking direct stakes in mineral companies, streamlining federal permitting, and entering into trade agreements with foreign countries. 

The administration’s most unusual strategies involved taking direct ownership in mineral companies, including taking a 5% stake in Lithium Americas, a Canadian company developing a lithium mine and processing plant in Nevada. The administration has also taken a 15% direct stake in MP Materials to build a rare-earth magnet supply chain by constructing the company’s second U.S. magnet facility.

The government has also taken stakes in mineral companies such as ReElement Technologies, Vulcan Elements, and Trilogy Metals.

The Trump administration’s approach has departed from how traditional federal support for mining projects has been structured. 

Kevin Brunelli, a nonresident fellow at Columbia’s Center on Global Energy Policy, and Tom Moerenhout, a professor at Columbia University’s School of International and Public Affairs, wrote in October that the government has typically backed mining projects through grants or loans, but the Trump administration has taken a new route by getting directly involved with the company.

“Some in the Trump administration have suggested that the government should be able to profit from the upside risk of projects with an ownership stake,” they wrote, adding that “Another potential reason for government equity investments is to have a lever to force the production of certain critical minerals even when they are not profitable but considered essential from a national security standpoint. At the same time, there is equity risk that if the project does not succeed the government will lose its initial capital injection.”

Last month, executives from critical mineral companies testified before House lawmakers to defend the administration’s approach of taking stakes in the companies, stating it was necessary to compete with China.

MP Materials Executive Vice President of Corporate Affairs Matthew Sloustcher said, “Free-market capitalism is the engine of our economy … but the reality is that we are not operating in a free market.”

He added, “China is both a monopoly and non-market economy.”

Still, the strategy has drawn criticism from some, raising concerns about the government’s approach to taking stakes in private companies and warning it could harm free-market capitalism. However, that pushback is not likely to slow down the administration, as it has hinted that it plans to take stakes in other critical minerals moving forward.

Earlier this month, at a Center for Strategic and International Studies event, White House National Energy Dominance Council Executive Director Jarrod Agen said that the administration will continue to make private-public partnerships.

“You’re going to see throughout this administration, historic deals when it comes to critical minerals, historic partnerships with the private sector, and then really a revitalization of mining in this country,” Agen said.

The administration has also sought to streamline permitting for critical mineral projects through the Permitting Council, a federal agency that guides essential infrastructure projects through the permitting process.

The council oversees the Fixing America’s Surface Transportation Act program, which supports the permitting process for infrastructure projects across sectors, including mining. The Trump administration has utilized the program to help mining projects obtain permits. FAST-41 currently has 14 covered mining projects in the permitting process.

Emily Domenech, executive director of the Permitting Council, told the Washington Examiner in October that the council is focusing on sectors they believe have been “forgotten.” She added, “I think the mining sector really is that forgotten sector that did not get attention from previous administrations, even when maybe it should have.”

In addition, President Donald Trump signed an executive order in March to invoke the Defense Production Act to boost domestic mineral production capacity by providing financing, loans, and investment for new projects. The order will also establish a dedicated critical minerals fund. It also called on several federal agencies to prioritize mineral expansion, including the interior, energy, and defense departments.

However, those domestic efforts have unfolded alongside escalating trade tensions between the U.S. and China. As Trump has imposed sweeping tariffs on Chinese goods, China has imposed strict export controls on its rare-earth elements.

China has used its dominance in the market against the U.S. by halting exports of Chinese minerals as part of trade negotiations. In October, China and the United States reached a truce over Beijing’s most recent export restrictions on an additional five rare earths. China agreed to suspend the restrictions for one year.

Still, the agreement does not address restrictions imposed by China in April, when it suspended exports of seven types of rare-earth metals and magnets and required companies to obtain a ministry-issued license for any exports.

HOW TRUMP RESHAPED THE AUTO INDUSTRY IN ONE YEAR

Shortly following the deal with China, Treasury Secretary Scott Bessent said, “China has alerted everyone to the danger. They’ve made a real mistake.”

“It’s one thing to put the gun on the table. It’s another thing to fire shots in the air,” he added.