The key facts
- The Trump administration has invested billions of dollars in companies across the mineral supply chain, including equity stakes
- Trump administration invested billions in mineral chain companies, including equity stakes
- Democrats have sent letters to companies, including USA Rare Earth, regarding potential conflicts of interest
- China maintains dominance: approximately 60% of global production of magnetic rare earth metals and 91% of refining, according to the IEA
- China maintains dominance: approximately 60% of global magnetic rare earth metal production and 91% of refining, according to IEA data
Investigations will not halt the mineral strategy
Observers expect the American strategy to reduce dependence on China in the field of critical minerals to continue advancing rapidly, despite concerns within the industry about impending congressional investigations following the midterm elections, which were celebrated by Democrats. This is reported by The National.
Who are the Democrats' grievances directed at?
The Trump administration has directed billions of dollars to companies across the entire mineral supply chain through various agencies and financial instruments, including the purchase of equity stakes. Even before the elections, Democrats notified several companies about potential conflicts of interest involving the Trump family and Commerce Secretary Howard Lutnick. 'Investigations will definitely happen,' said Ian Lange, a professor at the Colorado School of Mines and former senior economist at the Council of Economic Advisers during Trump's first term.
Deals under scrutiny
Among the companies mentioned in letters from Democratic lawmakers is USA Rare Earth, which concluded a $1.6 billion deal with the Department of Commerce in January in exchange for a 10% government stake. To close the deal, the company raised $1.5 billion in a private placement, with Cantor Fitzgerald, a company owned by Lutnick and now led by his son, acting as the placement agent. In November, the startup Vulcan Elements received a conditional credit commitment of $620 million from the Department of Defense and an additional $50 million from the Department of Commerce, just a few months after raising $65 million in private capital, including from a venture firm backed by Donald Trump Jr. According to US media reports, tungsten miner Kaz Resources secured a $1.6 billion financing package from the Export-Import Bank and the Development Corporation for projects in Kazakhstan; among the company's passive investors are Donald Trump Jr. and Eric Trump. Neither USA Rare Earth nor Vulcan responded to The National's requests for comment.
Industry urges against labeling
Within the industry, there is a belief that the political consequences of the elections should not overshadow efforts to secure minerals critical for energy and national security—a view widely shared by both parties. 'Do not perceive all of the Trump administration's critical mineral deals as one big pot of corruption. First, that is untrue, and second, if that happens, we risk damaging a sector that could lose investment appetite for several years,' said Tom Morenhaout, head of the critical minerals initiative at Columbia University's Center on Global Energy Policy. Lange added that he does not believe Congress will 'turn off the tap.' According to Morenhaout's estimates, out of approximately $30 billion in projects announced by Trump, only $8 billion is actually being allocated, with new announcements expected in the coming months.
The Pentagon as the main investor and Chinese dominance
Most government deals have been concluded through the Pentagon, reflecting the administration's view of minerals through the lens of the defense industrial base. According to data from the Council on Foreign Relations tracker, the Department of Defense has used equity stakes, warrants, loans, and other instruments in deals with at least eight companies, including $400 million for a 15% stake in MP Materials, $174 million with Alcoa for a gallium project, and a multi-billion-dollar partnership with the Department of Commerce and Korea Zinc for a smelter in Tennessee. Meanwhile, according to data from the International Energy Agency cited by the publication, China remains the undisputed dominant player: it accounts for approximately 60% of global production of magnetic rare earth metals and 91% of global refined output. China's export restrictions on rare earth metals have been suspended until January as part of a US-China trade truce; Trump is scheduled to attend the APEC summit in China this month, and upcoming G7 and Quad summits will provide further clues about the administration's next steps.
Permit reform and the long-term dilemma
Years of negotiations over energy permit reform legislation could have removed some barriers for capital-intensive and risky mining projects; however, lawmakers failed to pass it before the elections, and its fate during the lame-duck session of Congress remains uncertain. Supporters argue that the reform does not adequately address refining and processing: 'There is no single silver bullet that, once adopted, suddenly makes everything very simple,' said Rachel Ziemba, founder of the consulting firm Ziemba Insights. Puyan Kimayyan, director of the Applied Geopolitics program at the Institute for Peace and Diplomacy, noted that Democrats will find it difficult to balance permit reform with support for deals linked to the Trump administration: the mineral strategy 'cannot operate on a four-year political cycle when mining and processing projects often require a decade or more for development.' Ziemba added that all these developments reinforce Trump's interest in extending the truce with China, and the Chinese side shares the same interest.
