As the war rages on in the Middle East, the conflict has put the ongoing trade tensions with China to the side. But the barrage of missiles is a good reminder of the need for rare earth supply chains, especially permanent magnets. The smart folks at the Payne Institute of Public Policy at the Colorado School of Mines have a good breakdown on Foreign Policy showing the connection between critical minerals/technologies and every round of munition used in the war.

The magnets (and their supply chains) in those missiles, drones, radar systems, and guidance technology surrounding them are dominated by China. Washington has known about this vulnerability for years, and the Trump Administration has moved aggressively to address it, committing billions of dollars in loans, grants, and equity stakes to three domestic rare earth related companies it has effectively designated as national champions: MP Materials, USA Rare Earth, and Vulcan Elements. The scale and speed of this capital deployment is genuinely significant, and largely welcome. But the three companies chosen to anchor America's rare earth future face real risks and challenges.

The National Champions

MP Materials

• The Department of Defense executed a $400 million equity investment in MP Materials in July 2025, making the government the company's largest shareholder. DoD also issued a $150 million loan through the Office of Strategic Capital (OSC) to support heavy rare earth separation capacity at its Mountain Pass, California facility. The Pentagon additionally established a price floor of $110 per kilogram for neodymium-praseodymium oxide.

USA Rare Earth

• The Department of Commerce’s CHIPS Program has issued a non-binding Letter of Intent for a $1.6 billion financing package to support USA Rare Earth’s integrated "mine-to-magnet" operations. This includes a $1.3 billion senior secured loan and $277 million in direct federal grants to accelerate the development of the Round Top mine in Texas and a magnet manufacturing facility in Stillwater, Oklahoma. As part of the strategic investment, the Department of Commerce is expected to take a 10% equity stake in the company.

Vulcan Elements

• The Department of Defense will provide a $620 million loan through the Office of Strategic Capital for Vulcan’s permanent magnet facility. The Department of Commerce will also provide $50 million through the Biden-era CHIPS and Science Act and Commerce will receive $50 million in equity. As part of the agreement, ReElement Technologies in Indiana will receive $80 million from OSC to support the full supply chain for Vulcan.

This capital deployment marks a dramatic shift in U.S. industrial policy. This support is long overdue and the officials who pushed these deals through deserve credit for recognizing that the cost of inaction now exceeds the political and financial cost of action. As I wrote before, it is good that DC finally worries less “about the risk of another Solyndra and more about the risk of shuttered factories due to missing components.”

But there is substantial risk - including but not limited to how they financed the companies/projects and who they picked. The administration has made a deliberate choice to back specific firms, rather than cultivate a competitive ecosystem in which winners emerge organically. In reality, the government needed to “pick winners” but there are risks to the approach, especially the very Trumpy approach they have taken. I am not a geologist, chemical engineer, permanent magnet expert, or finance bro, but below are three key risks I see with this approach and the projects they chose.

Completion/Execution Risk

Can these companies actually deliver?

The three national champions must now prove they can commercialize at scale to support the rare earth magnet supply chain to reduce reliance on China. MP must evolve from a mining company into a fully integrated magnet producer. To my knowledge, no other company in the world is fully vertically integrated from the mine to magnet. It is copying the China’s multi-decade approach of full integration, but then extending it to the magnet level. They started producing magnets at the end of 2025, but plan to scale dramatically to 10,000mt of permanent magnets annually.

Vulcan is still a start-up with no operating track record. They need to scale from pilot to stage to full production to be able to support the US supply chain. Permanent magnet production is very difficult and they are trying to scale rapidly.

USA Rare Earth is pursuing vertical integration before its core resource is even permitted. They have produced magnets at pilot scale but also need to scale dramatically (they plan to produce at scale by 2029). There is also serious questions about their main rare earth mine. One of my favorite Substack reads, The Rare Earth Observer, has written extensively about their deposit. And this from a recent FT article.

US bets billions of dollars on unproven groups in rare earths deals

“But it remains unclear how much of each metal can be extracted. USA Rare Earth, founded in 2019, has not yet completed a so-called definitive feasibility study, a crucial milestone that looks at whether the metals in a deposit are realistically recoverable and economically viable to mine. Round Top has a history dating back decades of not being developed, and industry experts said the concentration of rare earths in the deposit — metal per unit of rock — was relatively low, meaning they may be more expensive and difficult to extract. “I don’t think it’s any secret that Round Top is very low ‘grade’ compared to many rare earth elements projects in development,” said David Merriman, research director at Project Blue, referring to the concentration.”

However, one very important thing about USA Rare Earth is their recent acquisition of Less Common Metals. LCM, based in the UK, is one of the few companies outside of China that commercially processes rare earths into the metals necessary for magnets. They plan to expand operations in France and Oklahoma.

One question I have not been able to answer - Why is the US not partnering with established Japanese magnet producers?

Japan's leading magnet producers have decades of expertise and proven commercial-scale production that no U.S. startup can match. At a moment when Japan and its companies are investing billions into the US to preserve market access and lower tariffs, the administration is instead betting on companies that have never filled a commercial magnet order. A Shin-Etsu facility in Texas, built with Japanese capital and know-how but employing American workers, would deliver more supply chain security faster than any domestically-owned startup.

Why is the Trump Administration not partnering with Japan to support a Shin-Etsu permanent magnet production facility in the US? (if someone has a good answer, I’d love to know)

Market Risk

Will there be enough demand to sustain them?

Below is from the Department of Commerce’s Section 232 “Report on the Effect of Imports of Neodymium-Iron-Boron (NdFeB) Permanent Magnets on the National Security.”

“If successful, these efforts to produce NdFeB magnets in the United States will be more than sufficient to satisfy U.S. defense-related demand. However, given the fact that defense demand accounts for only a small percentage of total demand, domestic firms in the NdFeB magnet value chain cannot rely solely on defense-related contracts to be viable. The nascent U.S. NdFeB magnet value chain will require substantial and consistent commercial demand and need a broad customer base to be economically sustainable.”

The 232 report was published in February, 2023, after the passage of the Inflation Reduction Act and all of its tax incentives for clean energy technology. Since then, the Trump Administration rolled back or eliminated the IRA incentives and policies that support electric vehicle adoption (demand) or the wind industry. This includes attempting to stop all off-shore wind, even going as far as paying Total Energies nearly $1 billion to not build a project (mainly because the President does not like offshore wind).

What will be the market for the permanent magnet producers?

Below are comments and graph from magnet expert, John Ormerod (highly recommend following him on Linkedin for his excellent insight).

Where will all the magnets be used?

Yesterday, Argus Media presented an interesting view of the US rare earths outlook: Magnets, demand trends, and supply developments. They are forecasting US demand for rare-earth magnets at around 12,000 metric tons in 2030. Given that we could have over 40,000 metric tons of capacity built in 2030, where will all those magnets be used? Asking for a friend!

Political Risk

Will these companies get bipartisan support if the projects are viewed as Trump projects?

Pre-2025, political risk was probably pretty low on the financial risk scorecard. A year and a half later, I think it has quickly risen. And I think there are serious risks for these projects.

I do not think future Democratic Administrations will go as far as the Trump Administration and rescind government investments in companies but there will be substantial oversight and potential action over perceived Trump Administration corruption.

Two of the “national champions” have already received criticism for ties to the Trump Administration and their families.

Vulcan Elements

a cadre of venture capital firms invested in the company in August. The group included 1789 Capital, a fund that counts the president’s eldest child, Donald Trump Jr., as a partner. Then, three months later, the US government unveiled a deal backing Vulcan with a loan of more than half a billion dollars. Under the terms of the arrangement, the Department of Commerce will also hold a $50 million stake in the company.

The funding from US taxpayers and private sources had a swift impact on Vulcan. When 1789 Capital invested in the company, it was valued at about $200 million, according to industry tracker PitchBook Data Inc. By January 2026 some investors were considering a valuation of nearly $2 billion in a new funding round, according to people familiar with the matter—a development that hasn’t previously been reported. 1789 Capital plans to invest again, Christopher Buskirk, a co-founder of the firm, wrote on social media platform X, though details are confidential and could change.

USA Rare Earth

Lutnick’s former investment bank, Cantor Fitzgerald, which is now run by his sons, supported USA Rare Earth on its initial public offering through a Spac deal last year, and its subsequent $1.5bn fundraising announced in January. The fundraising satisfied a condition of the provisional government funding, which also requires USA Rare Earth to complete its feasibility study and meet other milestones. USA Rare Earth’s connection to Lutnick has alarmed some Democrats, who have expressed “serious concerns” about the deal. In a letter to Lutnick in February, senators, including Elizabeth Warren, said it “could stand to enrich your immediate family and former company”. USA Rare Earth declined to comment on the letter.

Democrats in the House and Senate have already begun to ask questions.

Rep. Zoe Lofgren (D-CA), Ranking Member and future Chairman of the House Committee on Science, Space, and Technology sent a letter to Sec. Lutnick regarding USA Rare Earth.

Most notably, in its risk factor disclosures to the Securities and Exchange Commission, USAR disclosed that DOC will keep its full equity stake in the company even if the government subsequently backs out of the deal and withdraws its entire investment. Simultaneously, the company disclosed that one of DOC’s conditions to finalize the agreement was the execution of a private placement to raise private capital,4 which the company separately revealed would be led by Cantor Fitzgerald (Cantor), the financial services firm formerly controlled by you and now controlled by your sons. Secretary Lutnick, this USAR agreement creates conflicts of interest, blurs the line between your official responsibilities and your family interests, and appears to grant the federal government an extraordinary and even bizarre degree of leverage with which it can wield influence over a private company. How can such a lopsided power imbalance between government and private sector possibly be justified, wherein a company lies at the mercy of the Secretary of Commerce while simultaneously doing business with his sons? It cannot. DOC must explain itself immediately, and it must not finalize its investment in USA Rare Earth until it does.

….

Beyond my philosophical opposition to federal equity stakes, I also possess doubts about the legality of the equity stakes being secured by DOC. The Department asserts that the CHIPS and Science Act of 2022 provides it with the funds to pursue equity stakes in private companies and authorizes it to do so.11 But this assertion is legally dubious, and the legal foundation for these agreements is consequently thin.

From a House hearing in March - Rep. Jared Huffman (D-CA), the current Ranking Member and future Chairman of the House Natural Resources Committee.

Ranking Member Huffman: “I want to also ask about Vulcan. Donald Trump Jr., name partner in 1789 Capital. In August of 2025, they took an equity stake in Vulcan. Three months later, the administration commits $620 million, the largest loan that the Pentagon’s Office of Strategic Capital has ever made. And it went out without competitive bids, with the tech, without the technical disclosures that are used to verify whether a project is even viable before public money goes in. That was waived. Should the American people be concerned that the President’s son has a financial stake in a company that just received this huge windfall from the Pentagon?”

After the Republicans moved to adjourn the subcommittee hearing, Ranking Member Huffman asked: “What are you so afraid of? It’s a parliamentary inquiry. Taking this extraordinary move, to shut down debate and prevent a vote on this motion that is so squarely within the purpose of this committee.”

And Rep. Huffman joined Senator Martin Heinrich (D-N.M.), Ranking Member of the U.S. Senate Energy and Natural Resources Committee, and U.S. House Oversight and Government Reform Committee Ranking Member Robert Garcia (D-Calif.)

“By privileging select corporations through direct ownership—essentially picking winners and losers—the government may undermine broader market competition and the development of innovative technologies or mineral or material substitutions,” the lawmakers wrote.

The letter demands the legal justification for the equity stakes, the criteria used to select these companies over competitors, and policies in place to prevent conflicts of interest when the government regulates companies in which it owns stock.

The lawmakers noted, “To date, there has been no public disclosure of procedures or safeguards in place to ensure these ownership stakes do not influence permitting decisions, regulation generation, alteration, or enforcement, contracting decisions, or any other agency decisions relating to these mining and minerals projects.”

The letter also asks whether Administration officials, their families, Trump campaign donors, or Trump Organization affiliates hold personal stakes in any of these companies — and demands answers on what happens to Americans’ money if these bets go bad, who benefits if they pay off, and whether Congress will ever be notified when the government buys or sells stock.

“Ensuring these taxpayer dollars are effectively invested and potential proceeds are responsibly managed, without risk of corruption or conflicts of interest, is a matter of national security and public trust and warrants Congressional oversight,” the lawmakers wrote.

Vulcan and USA Rare Earth have denied any connection but the hearings will increase next year. And based on conversations with Democrats not involved in critical minerals, I think they see these investments more through the lens of corruption than economic security.

That is a real risk, because recent history suggests these projects might need additional support to be successful.

Japan’s partnership with Lynas Rare Earths is considered the most successful rare earths supply chain collaboration outside of China to date. Japan Organization for Metals and Energy Security (JOGMEC) and Sojitz, the Japanese trading house, provided financing to Lynas for the first time in 2011 following the dispute with China over the Senkaku Islands in 2010. The initial funding allowed Lynas to build out the Mt Weld mine in Australia and the processing facility in Malaysia.

But for the next 10 years, Japan was forced to provide additional support through debt restructuring to help Lynas get through periods of low prices and operational issues. Although it is now seen as forward looking, Japanese officials told me that they received serious domestic political criticism for their continued support and willingness to guide Lynas through this period. Now, through JOGMEC’s support, Lynas has expanded to heavy rare earths processing (the rare earths China has put export restrictions on) and agreed to supply agreement through 2038.

What does this have to do with the US?

There is a good chance that the United States government might need to provide additional support to three national champions to build out the domestic supply chain. There is a better chance Democrats, starting next January if (when?) they take back the House, will initiate Oversight hearings on related to corruption and the Trump Administration/family benefitting from government deals. Given the current political environment and inevitable Democratic scrutiny of these deals, bipartisan buy-in seems far from guaranteed.

But more importantly - perceived or real corruption could prevent future Administrations from using these tools (equity stakes, off take agreements) on strategic projects. That would be a great tragedy and hurt American national and economic security. Democrats and Republicans must work together to create processes that allow the government to use these tools in transparent and effective ways.

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Mining and Minerals

Several major stories on copper that demonstrate the challenges of ramping up production as the world faces increased demand due to AI and the energy transition.

Ivanhoe stuns market with deep Kamoa-Kakula output cut — Mining.com

Ivanhoe reduced their production guidance for the Kamoa-Kakula project in the DRC as they work to develop the mine for long term production.

• 2026 production - 290,000 to 330,000 tonnes ↓ from 380,000 to 420,000 tonnes

• 2027 production - 380,000 to 420,000 tonnes ↓ 500,000 to 540,000 tonnes

Barrick warns of “significant increases” to budget, timeline for Pakistan copper project — Mining.com

After announcing they were delaying the development of the Greenfield Reko Diq mine due to safety concerns caused by the war in the Middle East, Barrick now estimates increases in the capital budget.

Chile Copper Output at Nine-Year Low Adds to Supply Concerns - Bloomberg

Chile, the global leader in copper production, has seen production decline “on a running 12-month basis for seven straight months, weighed down by setbacks at projects aimed at accessing higher-grade ore.”

In Win for Trump, U.S. Firm Acquires Huge Congolese Cobalt Miner -WSJ

The long running saga over Chemaf, that started in the Biden Administration, has come to an end with Virtus Minerals becoming one of the only American owned projects in the region. Virtus will acquire the Mutoshi and Etoile cobalt mines but will take nearly $1 billion in debt. Beyond the news of an American company (backed by Indian operator) entering the DRC, the saga over Chemaf rose to the forefront of diplomatic dealings because originally Norinco, the Chinese SOE, attempted to acquire it before Gecamines and the State Department moved in. Now Virtus and its partners will need to make the projects operational.

QUICK HITS

• US bets billions of dollars on unproven groups in rare earths deals — Financial Times - Will have a piece related to this next week, but raises good questions on risk or what companies should the government be backing.

• Congo gives cobalt miners until end-April to use 2025 export quotas — Mining.com - “Democratic Republic of Congo’s mining regulator has said that miners must use all unfulfilled fourth-quarter 2025 export quotas by April 30, warning that any unused volumes after that will be forfeited and reallocated to a strategic reserve.”

• Japan's Takaichi, France's Macron to strike rare-earths deal — Nikkei Asia - JOGMEC has already invested in a REE project in France, but potential signs of more to come - “The governments of both countries aim to start a public-private project in southwestern France at the end of this year to refine heavy rare earths used in electric vehicle motors and other technologies.”

• ReElement, Mitsubishi Materials team up to advance critical mineral supply chains — Mining.com - The Indiana based company continues to expand their partnerships, this time Mitsubishi.

• US deep-sea mineral processing plant planned by Glomar, Australia's Cobalt Blue — Reuters

• Benchmark launches industry-leading rare earth permanent magnet prices — Benchmark Mineral Intelligence - Benchmark launch 44 rare earth permanent magnet price grades to support supply chain transparency.

• Judge upholds US government approval of ioneer's Nevada lithium mine — Reuters - ioneer still needs a longtime financial partner but the project moves forward after the long running battle over tiehm’s buckwheat.

• Glencore charts solo path to copper dominance — Mining.com - Analysts say the Swiss miner’s shift to transition metals comes as weaker coal markets have weighed on earnings.

• Arafura Rare Earths secures $159 million to boost Nolans project — Reuters - Nearly $159 million from Export Finance Australia and Germany’s KfW

Energy Transition

How Clean Energy Firms Are Trying to Survive the Trump Era - NY Times

Good look on how clean energy firms are handling the Trump Administration, centered around CERA Week - the biggest week in the oil and gas industry. The biggest thing to remember is that while the US pivots away from clean energy policies, the rest of the world is not.

Coal

Electrification has been synonymous with the energy transition. That could be changing - as oil and natural gas prices rise due to the war, consumers could move to EVs but countries will move more to coal. Two stories on coal…

Iran War’s Gas Supply Shock Pushes Top Consumers Back to Coal - Bloomberg

“Japan, one of the world’s largest gas importers, on Friday said it would expand the use of less-efficient coal power plants, as it tries to diversify its generation capabilities. In Bangladesh and India, coal plants are already shouldering the burden of shortfalls elsewhere…Even in Europe, where plenty of dirty power has been phased out, the Netherlands, Poland and the Czech Republic could all see more coal use if gas prices remain high. Germany is considering reactivating mothballed coal-fired plants as a way to curb electricity prices.”

Chinese coal miners eye comeback as Iran war shakes energy market - Nikkei Asia -

“Zhang Changyan, CEO of state-owned China Shenhua Energy, one of the country’s biggest coal miners, on Thursday said that higher crude oil and natural gas prices triggered by the Middle East conflict are “driving a temporary increase in coal demand.”

“Firstly, some countries may increase the proportion of coal-fired power generation due to tight natural gas supplies or rising prices,” he said in an online results briefing.

“Secondly,” he said, “rising raw material costs for petrochemicals are improving the profitability of coal-based chemical industries, leading to increased coal consumption in the chemical sector.”

India's solar exports struggle even as price gap with China narrows - Nikkei Asia

Good article that grapples with a lot of issues policymakers need to think of when discussing clean tech, especially solar. Flagging some key points

• “The pressure to find new markets has increased after the sector's largest export market, the U.S., slapped preliminary anti-dumping duties of nearly 126% on cells and panels in late February.”

• “Indian companies are currently dependent on these upstream components from China, and a basic custom duty of 25% on Chinese cell imports has further increased panel prices.”

• All buyers Nikkei Asia spoke to in the United Arab Emirates and Bangladesh said they preferred Chinese panels. “We tried procuring from India before, but it’s super expensive,” said Sibi Vetha Raj, business development manager at Dubai-based Falcon Energy. “There’s nearly a 20% difference.”

• “Indian manufacturers lag by 1.5 percentage points in efficiency as a result, meaning more panels are needed to generate the same output, pushing up costs, said Yana Hryshko, head of solar supply chain research at Wood Mackenzie

  “Indian modules are more expensive, but they’re less technologically advanced,” she said.”

QUICK HITS

• Tesla’s EV Sales Miss Expectations Again in Deepening Slump - Bloomberg

  

• France attracts Taiwan EV battery maker, looks for others to set up shop — Nikkei Asia - Europe previously tried to foster local battery manufacturers, but delays in mass production and price competition with Chinese rivals led to the bankruptcies of Swedish company Northvolt and Britishvolt in the U.K.

  France shifted from a self-reliant approach to attracting leading companies, domestic or international, to cultivate the industry. Battery factories were built one after another in northern France, an area that is now sometimes called, “Battery Valley.”

• EV demand is getting a boost from the Iran war — just as auto giants pivot back to combustion engines - CNBC

• BYD’s overseas share reaches 40% in March — Electrive

• USA: Uber expands EV grants nationwide — Electrive - “Uber has expanded its electric vehicle incentive scheme across the United States, offering eligible drivers a grant of up to $4,000 to support the transition to battery-electric vehicles. The programme, previously limited to select markets is now available nationwide.”

Geopolitics and Economic Statecraft

Trump Sanctions Pivot Helps Iran Oil Tycoons Boost War Profits - Bloomberg

“After the DOJ moved to seize more than $15 milliontied to the Shamkhani shipping empire, the US Treasury issued a temporary sanctions waiver that opened the door for Iran-linked vessels, including some tied to him, to move and sell oil already loaded as of March 20. The measure was designed to take the sting out of rising oil prices by boosting supply.

Combined, it means that sanctioned Iranian oil, which sold at a steep discount pre-war, is now changing hands at a slight premium to Brent crude. The oil price stood at around $110 a barrel on Thursday after Trump warned of a possible escalation in the war in coming weeks.”

U.S. Lifts Sanctions on Venezuela’s New Leader - NY Times -

Venezuela’s acting President, Delcy Rodriguez, has officially been removed from the “specially designated nationals” list (the sanctions list).

China Is Taking On Mining Giants to Reorder a $190 Billion Market - Bloomberg

Talk around de-dollarization focuses on oil when discussing commodities. But China’s moves in the iron-ore sector are more interesting. While focused on pricing power, it is tied to de-dollarization.

“China has sought for decades to turn its clout as the world’s largest commodities consumer into pricing power. With iron ore — the most traded raw material after oil, and the backbone of global economic expansion — it is closer than ever to success.

The engine behind the current campaign is China Mineral Resources Group Co., an opaque company directly under the country’s central government which has been locked in a confrontation with mining giant BHP Group Ltd. for months. This is already the most significant commercial clash in nearly two decades between the country and one of its top suppliers, and has sent shockwaves through the industry.

Those heated negotiations are now reaching a critical juncture. A new chief executive is set to take the helm at BHP, with every incentive to resolve a deepening crisis. For China, meanwhile, a month-long war in the Middle East has only underscored the importance of CMRG’s mission, as the conflict deals another blow to US financial dominance and reinforces the urgency of holding more sway in key commodity markets.”

QUICK HITS

• China retaliates against US trade probes ahead of Xi Jinping-Donald Trump talks - FT - “China has hit back against new US trade investigations into its exports, escalating trade tensions just weeks ahead of a planned visit to Beijing by President Donald Trump. Beijing’s commerce ministry said on Friday it was initiating two probes into the US’s so-called “section 301” investigations into China and scores of other countries. Washington announced the investigations this month after the US Supreme Court in April ruled that Trump’s “liberation day” tariffs were illegal. “The Ministry of Commerce will . . . advance the investigation into barriers imposed by the United States, and take corresponding measures . . . to resolutely safeguard its legitimate rights,” the Chinese ministry said.”

• Get ready for $200 a barrel oil prices if Hormuz stays closed - Axios

• How the Iran war is playing into China’s hands - Semafor -

• LNG powerhouse Australia leans on export strength to weather energy shock - FT

• PM says free market has left us exposed, flags more industry support - The Australian Financial Review - “Anthony Albanese has flagged increased government support for critical industries, including a boost to the nation’s dwindling refining capacity,saying the free market approach of past decades has left Australia dangerously vulnerable to shocks such as the current oil crisis.”

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Mining and Minerals

China's rare-earth magnet exports to Japan rise despite controls - Nikkei Asia

The latest Chinese export data is out (be on the lookout for a new piece focused on exports to the US) and “China's exports of rare-earth magnets to Japan in the January-February period rose 9.7% on the year to 443 metric tons, but according to a Japanese government official, shipments of heavy rare-earth elements such as dysprosium have fallen.”

US Agency to Own 20% of Graphite Miner Syrah in Critical Minerals Push - Bloomberg

“DFC will convert a $31 million existing loan to shares in Syrah in two tranches that will give it a stake of about 20% in the company that operates one of the world’s biggest graphite mines in northern Mozambique, according to a statement. The agency will also disburse an additional $15 million to the subsidiary operating the project.”

Syrah received financial support during the Biden Administration - DFC support for the graphite mine in Mozambique and a DOE loan for a processing facility in Louisiana. The mine, one of the most advanced/highest grade outside of China, faced political delays following conflict in Mozambique. But it is vital for any non-China graphite supply chain.

U.S. Considers Withholding H.I.V. Aid Unless Zambia Expands Minerals Access - NY Times

I missed this story last week but wanted to flag it this week because it is disgusting.

“The State Department is considering withholding lifesaving assistance to people with H.I.V. in Zambia as a negotiating tactic to force the government of the southern African country to sign a deal giving the United States more access to its critical minerals. “We will only secure our priorities by demonstrating willingness to publicly take support away from Zambia on a massive scale,” a draft of a memo prepared for Secretary of State Marco Rubio by the department’s Africa Bureau staff says. A copy of the memo was obtained by The New York Times.

Some 1.3 million people in Zambia rely on daily H.I.V. treatment that is provided through the decades-old U.S. President’s Emergency Plan for AIDS Relief (known as PEPFAR) and on tuberculosis and malaria medications that save tens of thousands of Zambian lives each year. The Trump administration is considering whether to “significantly cut assistance” as soon as May, to increase pressure on Zambia, the memo says.”

Despite all the talk about critical minerals, it is vital to remember what this is about…

”Rumors about the negotiations have spread through Zambia, and they are wrenching for people dependent on the U.S.-supplied antiretroviral medications, or ARVs, they take each day.

“If they told me to be buying ARVs, the fifty kwacha, or a hundred, that’s four or five dollars per month, even three dollars, where am I going to get it?” asked Julius Kachidza, a 56-year-old advocate for people living with H.I.V. who lives in Chongwe, near the capital. “I barely eat a meal a day.”

Mr. Kachidza was diagnosed with H.I.V. in 2001, and was near death when he first got access to the drugs. His wife, who was also H.I.V.-positive, died 15 years ago. A son who was born with the virus is now in his 20s and also reliant on U.S.-financed medication…Perhaps, over five years, the government may successfully take over the program, but an abrupt slash in funds, like the country saw last year when the Trump administration took office, would be apocalyptic, he said. “It could be quite a disaster, especially to me. And the majority of people living with H.I.V. in Zambia.”

Zijin’s Congo Lithium Mine Set to Be Among World’s Biggest - Bloomberg

While the dispute of AVZ’s concession continues, Zijin has rapidly pushed forward the development of part of the large Manono project the DRC.

“The Chinese company – which has grown at breakneck speed to become a top producer of copper and gold – has been developing the Manono lithium project in southeastern Congo since it secured the prized deposit in 2023.

The mine, which Zijin aims to commission this June, will be able to supply 130,000 tons of lithium carbonate equivalent a year once it reaches full capacity, according to a report the company released on March 20.

That “would put Manono in the highest echelons” of hard-rock lithium assets, with only a couple of giant mines in Australia having the capacity to produce more, said Martin Jackson, head of battery materials markets at consultancy CRU Group.”

Ex-China rare earths premium to grow, especially for heavies — Benchmark Mineral Intelligence

QUICK HITS

• Column: Every missile fired over Iran is burning through US tungsten stocks — Reuters - Tungsten prices continue to rise due to its importance in military applications, but the long term supply deficit of non-Chinese sources remain.

• Rio Tinto expects Resolution Copper mine to open by mid-2030s — Mining.com - Following the good news about the land exchange, “Rio Tinto aims to open Arizona’s Resolution Copper mine by the mid-2030s but may need to export some of its copper concentrate due to the challenging economics of smelting in the US.”

• USA Rare Earth commissions new magnet production line at Oklahoma plant — Mining.com

• Barrick delays Pakistan mega mine as Iran conflict rattles region— FT - Delays due to the ongoing conflict for the greenfield copper project

• Prolonged Iran war would hammer top copper miners — Mining.com

• Lynas plans Vietnam rare earth metal plant with LS Cable & System — Nikkei Asia

Energy Transition

CATL captures half of China’s EV battery market — Electrive

Schumer Pledges Democrats Will Restore Clean Energy Tax Credits — NY Times

Unlikely due to the fact that it would require veto-proof majorities, but telling where Democrats see the issue right now.

”If Democrats win control of Congress in this fall’s elections, they will try to restore and expand tax credits for wind, solar and other renewable energy that President Trump and Republicans largely eliminated last year, Senator Chuck Schumer, the minority leader, said on Wednesday.

The party would also seek to strip the oil, gas and coal companies of more than $18 billion in new tax incentives enacted in Mr. Trump’s sweeping tax measure, he added.”

New EV sales drop 28% in Q1 2026, but used EVs surge 12% to near-record levels - Electrek

Data from Cox Automotive

QUICK HITS

• Oil Is Surging. Clean Energy Stocks Are Down Anyway. - Heatmap News

• What We Don’t Know About Trump’s $1 Billion Deal With Total Could Kill It - Heatmap News - More on the story I mentioned last week, the Trump Administration is absurdly paying Total not to build an offshore wind project because the President does not like wind. But a lot of questions remain.

• The Chinese Billionaire Who Says America’s EV Market Is Doomed Without Him - WSJ - CATL does not have a factory in the US, but American automakers rely on them.

• The Iran War is Revealing the Messy Middle of Our Renewable Energy Transition — NY Times - The Midtransition

• Wealthy Investors Target Foes of Clean Energy, Seeking Revenge — NY Times

• BYD Profit Disappoints Again on ‘Brutal’ China EV Competition - Bloomberg - “Fourth-quarter net income fell 38% to 9.3 billion yuan ($1.3 billion), while revenue fell about 14% to 237.7 billion yuan, according to figures derived from annual numbers reported Friday. Both profit and sales missed average analyst estimates compiled by Bloomberg” - A key reason BYD is racing ahead in the story below…

• BYD plans 20 Canadian dealerships within a year as 6.1% tariff deal opens the floodgates - Electrek

• Volkswagen Group’s joint venture with Rivian hits latest milestone, unlocking another $1B for the EV automaker - Electrek

• What does the Iran war mean for clean energy transition? - The Guardian

• Carbon Capture Technology Is Helping This Pub Make Beer — NY Times

Geopolitics and Economic Statecraft

Iran Is Using America’s Playbook Against Us - NY Times

No one knows the economic statecraft playbook better than Eddie Fishman. He lays out how Iran is utilizing the playbook the US built to deploy against Iran with the closure of the Strait Hormuz.

“In recent weeks, Iran has turned this strategy against the United States. Analysts long assumed that closing the Strait of Hormuz would require Iran to lay thousands of sea mines and render the strait physically impassable. That made such a move unlikely, since Iran depends on the same waterway to export its own oil.

Instead, Iran has shown it can disrupt the strait at far lower cost. By striking a small number of ships with relatively cheap drones and missiles, Tehran has been able to reshape the risk calculus of the entire global shipping industry. Iran does not need to target every ship, just as the United States did not need to sanction every bank. A few examples were enough to force the rest to fall in line.

Despite Mr. Trump’s best efforts — which have included offeringgovernment-backed insurance and encouraging mariners to “show some guts” — traffic has fallen by around 90 percent since the start of the war. The few ships still transiting the waterway are mostly Iranian. In effect, Tehran has established itself as gatekeeper of the strait, demanding multimillion-dollar tolls to guarantee safe passage.”

An Invisible Bottleneck: A Helium Shortage Threatens the Chip Industry - NY Times

“A byproduct of natural gas processing, helium is produced mainly in the United States and Qatar. When output in Qatar was halted this month, it cut off roughly a third of the global supply. The outlook worsened last week after Iran struck Qatar’s largest liquefied natural gas facility, damaging helium production lines that could take years to rebuild.

Without helium, leading chip makers, including Taiwan Semiconductor Manufacturing Company and South Korea’s Samsung Electronics and SK Hynix, could struggle to keep production lines running, with cascading effects for semiconductor-powered devices from Apple’s iPhones to Nvidia’s A.I. servers.

Helium may be best known for keeping balloons afloat, but its industrial uses are far more consequential. As the coldest liquid on earth, it cools superconducting magnets in M.R.I. machines. A shortage could ripple far beyond chip making, affecting everything from scientific research to space travel.”

QUICK HITS

• Apple to source US-made parts from Japan’s TDK under reshoring push - FT

• Trump Draws Bipartisan Backlash for Easing Oil Sanctions on Russia and Iran - NY Times

• EU to clinch trade deal with Australia after eight years of talks - FT

Reports

Raw Power: China locks-in global dominance of critical minerals and metals with $120bn outbound investment surge - Clean Energy Finance

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The war in the Middle East continues to impact the oil and gas markets as the latest escalation further damages global natural gas supply. In other headlines, major copper operators look to expand operations (including good news on U.S. domestic supply), the impact of oil prices is already is being seen in EV sales, and new critical minerals agreements.

Mining and Minerals

Rare-Earth Miner Lynas Advances Plans to Supply Pentagon - Bloomberg

Australian miner, Lynas, and the DoD are moving forward on a four year supply agreement for light and heavy rare earth oxides from its Malaysia processing facility. The deal is worth $96 million and includes a floor price of $110 per kilogram for neodymium-praseodymium oxide, the same floor price given to MP Materials. Lynas is one of the few heavy rare earth oxide producers outside of China.

This is the second major deal the DoD has made with Lynas. However, the first agreement signed in 2023 for a processing facility in Texas never came to fruition, and most likely never will.

US-backed group buys DR Congo copper-cobalt mine under minerals deal - FT

“American company Virtus Minerals is poised to buy Chemaf, a troubled miner in the Democratic Republic of Congo, marking the first commercial deal borne out of the growing minerals partnership between the US and the African nation.”

This will be the first major mine in the DRC owned by an American company. Financing for the project is supported by the DFC-backed Orion Resources Fund. Diplomatic pressure on the Chemaf project started during the Biden Administration and is now getting across the finish line with U.S. government financing.

How Brazil Can Chip Away at China’s Rare Earths Dominance - Bloomberg

US Snubbed by Lula Government at Critical Minerals Summit - Bloomberg

“the US Embassy hosted a critical minerals summit in Sao Paulo without any senior members of Lula’s administration in attendance.”

Two stories that demonstrate the necessity of international cooperation on critical minerals supply chains and the impact of poor diplomatic relations. Brazil is one of the few immediate sources of heavy rare earths outside of China’s grip.

The State Department during the Biden Administration brought Serra Verde, a HRE mine in Brazil, into the MSP and the DFC began to work with them in order to finance the project and get their material to flow to the US or Europe, instead of China. DFC finally finalized the agreement with Serra Verde this year. But Brazilian resources go beyond REs and could be a key regional ally, but diplomatic relations need to improve.

US, Japan to focus rare earths cooperation on select group of minerals at first - Reuters

Like I said last week, this is the start of a long process.

Rio Tinto gains control of Resolution Copper acreage after years-long court fight -Mining.com

Speaking of long processes…

“Rio Tinto said on Monday it has gained control of acreage in Arizona needed to build the Resolution Copper mine, a project slated to become one of the largest US sources of the critical mineral but one that Native Americans have opposed for more than 20 years.

The move marks what is likely the end of a long-running and complex legal fight in which the religious rights of the San Carlos Apache people were pitted against rising demand for copper for the energy transition and Washington’s efforts to wean itself off foreign supplies.”

QUICK HITS

• US launches $500M initiative to boost critical minerals processing - Mining.com - $500 million from Bipartisan Infrastructure during the last administration. Webinar on March 26th for companies interested.

• Munitions metal tungsten outshines gold, copper in 557% rally — Mining.com -At $2,250 per metric ton unit, prices have risen 557% since Beijing added certain tungsten products to its export control list in February last year.

• Nth Cycle inks $1B offtake deal with Trafigura — Mining.com - Nth Cycle said it plans to establish new operations in South Carolina and the Netherlands. (Biased but great to see a Massachusetts company continue to grow)

• Cobalt Shortages Driven by Congo Curbs Seen Lasting Through 2030 - Bloomberg - DRC export restrictions impacting the global market.

• Korea Zinc Seeks $2 Billion Loan for US Critical Minerals Plant — Bloomberg - Seeking $2.35 billion loan for smelter. Read more about the potential smelter in my previous post.

• Lynas makes breakthrough on samarium, key rare earth for defense — Nikkei Asia - Achieved production of samarium oxide, used in samarium cobalt (SmCo) magnets

• Nouveau Monde Graphite secures $335M project debt financing — Mining.com - Export Development Canada (EDC) and the Canada Infrastructure Bank (CIB) jointly committed $335 million (C$459 million) in senior debt to fund the project.

• Sangdong tungsten mine in South Korea returns to production after 30 years — Mining.com - At full capacity, Sangdong is expected to supply around 40% of the global tungsten demand outside China.

• Beyond Pax Silica: Japan, France and Canada seek rare earth autonomy — South China Morning Post

• Freeport seeks permit for $7.5B Chile copper expansion — Mining.com - “Expansion would increase annual copper output by more than 300,000 tonnes, compared with 91,000 tonnes produced last year.”

• BHP targets $5B Escondida upgrade to fight grade decline — Mining.com - The new concentrator aims to counter lower grades and secure long-term copper production amid rising global demand.

• KoBold Metals targets early-2030s copper output at Zambia project — Mining.com

• Apple supplier Murata starts US-China rare earths decoupling - FT - “Apple supplier Murata Manufacturing will start separating its rare earths supply chain in China from the rest of its business over the next three years”

• Ghana Approves Lithium Project That Will Ship Mineral to US - Bloomberg -

• Brandon Craig to succeed Mike Henry as BHP CEO

Energy Transition

Democrats Hammer Trump on ‘Energy Affordability’ as Iran War Continues - NY Times -

“In a new report on Tuesday, top Senate Democrats accused the Trump administration of waging a “war on energy affordability” by canceling hundreds of clean energy projects even before the United States and Israel launched strikes on Iran — strikes which have sent energy costs higher. The report is a precursor to a series of live-streamed round-table discussions that party leaders hope will keep a spotlight on their campaign mantra for the fall’s midterm elections, focusing on lowering the cost of living.”

Trump Officials Weigh New $1 Billion Deal to Stop Offshore Wind Farms - NY Times -

Just unbelievably stupid. $1 billion because Trump doesn’t like wind turbines.

“Senior administration officials are drafting settlement agreements that would pay nearly $1 billion to TotalEnergies, the French energy company behind two wind farms off New York State and North Carolina, according to documents reviewed by The New York Times, including copies of the agreements.

Under the terms of the proposed settlements, the Interior Department would cancel the leases in federal waters for the two projects, known as Attentive Energy and Carolina Long Bay, the documents show. The Justice Department would then pay more than $928 million to TotalEnergies, reimbursing the company for its winning bids in lease sales during the Biden administration.”

BYD Showrooms Are Bustling Across Asia After Iran Oil Shock - Bloomberg

The impact of high oil prices - “At a BYD Co. car dealership in Manila’s financial district, demand for the Chinese company’s electric vehicles is so high that Matthew Dominique Poh said he’s seen a month’s worth of orders in just the past two weeks.

“Clients are replacing units in favor of EVs because of the oil price hikes,” said Poh, who’s been a salesman at the dealership for the past seven months.”

LG Energy’s once-troubled ESS business emerging as golden goose - Korean Economic Daily

Battery cells for energy storage systems are emerging as a new profit engine for South Korean battery makers, cushioning weak demand from electric vehicle manufacturers as the artificial intelligence boom drives power-hungry data centers and utilities step up investment in grid upgrades.

In China, battery makers bet big on sodium in move away from critical minerals - Reuters

Good reminder that as folks in the U.S. discuss innovation or leapfrogging, it is China that will most likely produce the innovation.

QUICK HITS

• Uber strikes $1.25bn deal with Rivian for robotaxi fleet - FT - “Uber has agreed to invest as much as $1.25bn in the US electric-truck maker Rivian and buy up to 50,000 autonomous vehicles”

• CATL Hong Kong Rally Drives Record Premium Over Mainland Shares — Bloomberg - “CATL’s Hong Kong shares have surged around 39% since last week’s earnings beat, pushing their premium over the firm’s Shenzhen-listed stock to a record 48%.”

• Xiaomi Shares Fall on Concern Refreshed EV Will Reduce Margins — Bloomberg - “Xiaomi’s refreshed SU7 sedan, which comes with hardware and safety upgrades, will start from 219,900 yuan ($31,869) — about 1.9% more than the first generation version…the slim price increase isn’t enough to offset rising input costs, according to market watchers.”

• Eve Energy launches two new solid-state batteries — Electrive | Chinese battery manufacturer Eve Energy has begun small-scale production.

• Rolls-Royce backs away from full electrification target for 2030 — Electrive - Rolls-Royce is stepping back from its plan to go all-electric by 2030, as demand for combustion models remains strong.

• Germany: Lyten to launch battery production at former Northvolt site in Heide by 2028 — Electrive - US battery manufacturer Lyten plans to create around 1,000 jobs at the Northvolt site in Heide

• Electric Speed Boat Maker Expands to Defense With New Funding - Bloomberg

Geopolitics and Economic Statecraft

My colleagues at the Center on Global Energy Policy have an up to date blog and new podcast on the ongoing war in the Middle East and its impact on global energy markets.

‘Armageddon scenario’ for gas markets as Qatar hit by missiles - FT
”In normal times, a fifth of the world’s supply of liquefied natural gas (LNG) flows from Ras Laffan, a vast industrial site almost three times the size of Paris built over three decades at a cost of hundreds of billions of dollars. LNG terminals are some of the biggest and most complex constructions in human history, and Ras Laffan is the largest of them all, turning Qatar’s huge gas reserves into a super-chilled fuel that can be shipped around the world. At least before the Iranian missiles arrived.

“I woke up this morning and thought, ‘No, please no,’” said Anne-Sophie Corbeau, a former head of gas analysis at BP who is now at Columbia University’s Center on Global Energy Policy. “This has always been my nightmare scenario, my Armageddon scenario, the one I didn’t want to happen.”

US Taxpayers and Trump’s Son Are Backing the Same Rare-Earth Startup - Bloomberg

Good read on Vulcan…I believe that political risk - mainly Democrats scrutinizing Trump-era deals due to ties like this - is an under appreciated risk for the critical minerals supply chain going forward.

QUICK HITS

• China’s supply chain meets the wall of African resource nationalism — South China Morning Post

• How Geopolitics Threaten K-Pop’s Ambitions in China — NY Times - “Japanese members of some K-pop bands have been absent from recent concerts in China. Experts say that’s linked to tension between Tokyo and Beijing.”

• South Korea mulls state energy merger as geopolitics recast resource security — KED Global - “Seoul is weighing a single state vehicle for oil, gas and minerals as war, rivalry and resource nationalism make supply chains more vulnerable”

Podcasts/Webinars/Videos

• What to expect from the lithium markets in South America - Fastmarkets

• The Toymaker vs. the Tariffs - China Talk

• The Iran War Energy Crisis is Here - The Long Game

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Once again, the war in the Middle East has taken over everything. But prior to the war, there was an uptick in stories about Chinese EV’s potentially coming to the United States. Two major stories led to an increase in the stories.

1. Canada announced they will allow for the importation of 49,000 Chinese vehicles. Automotive News reports that BYD, Chery, and Geely plan to sell into the market next year.

2. Ford reportedly discussed partnering with Xiaomi, the Chinese tech and auto company, through a joint venture to produce vehicles in the U.S. Additionally, Jim Farley, the CEO of Ford, talked to the Trump Administration about “Chinese carmakers partnering with US companies through joint ventures in which the American company holds a controlling stake” to build vehicles in the U.S.

Are Chinese vehicles coming to America?

As I have written before, most Americans do not realize the rise in Chinese electric vehicles. They are taking over the world and the U.S. is a major outlier. Chinese automakers exported 2.6 million electric vehicles in 2025, a 104% increase compared to 2024. As the vehicles are prohibited in the U.S., Chinese vehicles accounted for nearly 90% of all EV sales in Mexico 2025. Why? They are excellent vehicles that come at an excellent price.

Chinese EV Sales - 2025

The closest most Americans will get to driving a Chinese EV is if they drive a Volvo or Polestar - they are owned by Geely, a Chinese auto company.

And despite recent reports, that will not change any time soon.

One major impediment (and the one most people assume) is tariffs - the Biden Administration placed 100% tariffs on Chinese EVs in 2024 and the Trump Administration has continued those tariffs. However, Chinese brands could manufacture in the U.S. or in a lower tariff jurisdiction, like Brazil or Thailand. There are also safety standards that would require additional domestic investment, but they are not prohibitive.

Instead, the largest impediment is a government regulation from the Department of Commerce finalized during the final days of the Biden Administration and continued during the Trump Administration.

What is the Connected Vehicle Rule?

At the very end of the Biden Administration, the Bureau of Industry and Security (BIS) at the Department of Commerce released the final rule entitled “Securing the Information and Communications Technology and Services Supply Chain: Connected Vehicles.” The rule states

BIS prohibits transactions involving Vehicle Connectivity System (VCS) hardware and covered software designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of the People's Republic of China, including the Hong Kong Special Administrative Region and the Macau Special Administrative Region, (PRC); or the Russian Federation (Russia).

It should be noted that BIS went through a long rule making process with ample public comments. They did not just hastily drop the rule before Trump came in. They went through a long process.

“Connected” means they have onboard hardware and software systems to “communicate via dedicated short-range communication, cellular telecommunications connectivity, satellite communication, or other wireless spectrum connectivity with any other network or device.”

In plain speak - Your car, and especially new high-tech EVs, are as much a computer as they are an automobile. And just as there are cyber security risks with your computer, phone, or other tech, there could be security concerns with your vehicle.

As Commerce states in the final rule, “Today's vehicles contain a myriad of connected components that provide greater convenience for consumers and increase road safety for both drivers and pedestrians, such as Wi-Fi, Bluetooth, cellular, and satellite connectivity.” Examples of this connection include access to vehicle data or services that allow for vehicle updates. The goal of the technology is to make it easier for automakers to collect information about the vehicles or improve them. But they can also create security risks.

Why is this a big deal?

Once again, from the Department of Commerce

“PRC and Russia are able to leverage domestic legislation and regulatory regimes to compel companies subject to their jurisdiction, including carmakers and their suppliers, to cooperate with security and intelligence services. Such control over companies and their products and services means that their equipment is easily exploitable by PRC and Russian authorities. The privileged access that the PRC and Russia may gain to connected vehicles through their components, including software and hardware, could enable those foreign adversaries to (1) exfiltrate sensitive data collected by connected vehicles and (2) allow remote access and manipulation of connected vehicles driven by U.S. persons.”

In plain speak - the U.S. government is worried that Chinese companies will be forced to share information a vehicle collected with the Chinese government or allow for the Chinese government to remotely access (potentially shut down) vehicles. This could include everything from collecting information about military bases when a vehicle drives on it to the extreme scenario where they hypothetically take control of the vehicles and cause serious damage.

What does the Rule prohibit?

The final rule prohibits the following

1. “VCS hardware importers from knowingly importing into the United States certain hardware for VCS”

2. “Connected vehicle manufacturers from knowingly importing into the United States completed connected vehicles incorporating covered software”

3. “Connected vehicle manufacturers from knowingly selling within the United States completed connected vehicles that incorporate covered software”

When the hardware or software is (and here comes the important part) “designed, developed, manufactured, or supplied by persons owned by, controlled by, or subject to the jurisdiction or direction of the PRC or Russia” AND “prohibits connected vehicle manufacturers who are persons owned by, controlled by, or subject to the jurisdiction or direction of the PRC or Russia from knowingly selling in the United States completed connected vehicles that incorporate VCS hardware or covered software”

The software ban comes into effect for Model Year 2027 and hardware ban is for Model Year 2030.

In plain speak - A modern vehicle cannot be imported into the United States if it was produced by a Chinese company, even if it was built outside of China. But also, if a Chinese EV company wanted to manufacture in the U.S., they would be required to use software and hardware that is separate from their normal vehicles.

Cut to the chase…will I ever be able to drive a BYD or Xiaomi in the United States?

Today, the answer is no. The connected vehicle rule does not allow for it. And I think the answer will be no for a while.

The most likely scenario is what Ford laid out to the Trump Administration - you end up driving a vehicle that is built through a joint venture between an American and Chinese brand. But even then, I think that is a long ways off.

Because there is another impediment…politics.

Last week a series of automotive industry groups wrote to President Trump urging the Administration to not allow Chinese automotive groups to manufacture IN the United States. They warn Chinese brands manufacturing in the U.S. would “pose a direct threat to America’s global competitiveness, national security, and automotive industrial base.”

Right now there is no domestic constituency pushing to allow for Chinese automakers into the U.S. Sure, people hear about how Chinese EVs are cool and cheap. But the majority of Americans have not heard of BYD or Xpeng. They do know American brands and know they manufacture in the United States.

So if you’re American or want to drive a BYD, head down to Mexico or head up to Canada next year, and see if you can take a test drive. I think it will be the closest you get.

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Mining and Minerals

Japan, France, Canada work on alternatives to US-led trade bloc for rare earth supplies - Reuters

“G7 members Japan, France and Canada are working on alternatives to a U.S.-led trade bloc to secure critical minerals and reduce reliance on China.”

Potential options include “import quotas on certain rare earths, subsidies for mining companies to diversify the supply chain on critical minerals, and a buyers’ club”

US Critical Minerals Talks Advance With EU, Japan on Price Floor - Bloomberg

“The US, Japan and the European Union are set to announce plans in the coming weeks to lay the foundation for a trade agreement in critical minerals, according to people familiar with the preparations.”

This is only the beginning of the process and there is a lot of work to do.

Lynas secures rare earths price floor in updated Japan supply agreement - Nikkei Asia

Japan’s JOGMEC/Sojitz JV will now guarantee purchase of 5,000 tons of Lynas NdPr annually through 2038 at a floor price of $110/kg — the same floor the U.S. extended to MP Materials last year. The new agreement also covers heavy rare earths, terbium and dysprosium which Lynas began to separate last year in Malaysia.

Japan’s playbook on raw materials security is worth taking global— FT

BMW, Rheinmetall, and Germany’s automotive lobby are pushing for Germany to develop a Japanese-style trading house model to make joint mineral purchases. The JOGMEC model continues to gain popularity.

The Bank Trump Is Relying On for Rare-Earth Minerals — NY Times

The Export-Import Bank (EXIM), once derided by Trump as corporate welfare, is being repurposed as the financial engine of Project Vault, a $10 billion initiative to scour the globe for critical minerals and stockpile them domestically. The largest loan in the bank’s 92-year history. NY Times provides more insight into EXIM but specifics on Project Vault remain sparing.

Rio Tinto ships first lithium from Rincon, nets $1.175B project loan — Mining.com

Rio’s Rincon brine project in Argentina has made its first commercial lithium carbonate shipment. The 3,000-tonne starter plant is running; the 57,000-tonne expansion is under construction, targeting 2028.

Nickel market could turn deficit due to Indonesia quota, says Macquarie — Mining.com

Indonesia’s December production quotas are starting to impact the market. Macquarie believes the global nickel market could move into deficit this year, with NPI prices already up ~$3,000. A meaningful reversal after years of oversupply.

Trafigura inks 10-year lithium deal with Smackover — Trafigura

Trafigura will take 8,000 tonnes/year of battery-grade lithium carbonate from Standard Lithium’s Arkansas project over ten years (more than 40% of the project’s targeted Phase 1 output).

QUICK HITS

• Japan’s Proterial eyes making magnets without heavy rare earths in North America — Nikkei Asia - Proximity to customers, reduction of China exposure.

• Opinion: Latin America’s lithium triangle is now in the hands of the right — FT With Kast’s inauguration on March 11, all three lithium triangle nations are now led by center-right or right-wing governments. The “lithium OPEC” moment is dead.

• Mongolia presses Rio Tinto for bigger Oyu Tolgoi cut — Mining.com

  Ulaanbaatar wants to raise its share of returns from the $18B copper mine to ~60%. Resource nationalism continues to grow.

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Energy Transition

China’s CATL profit surges 42% as global market share hits all-time high — South China Morning Post

CATL’s net profit hit 72.2 billion yuan (~$10.4B) in 2025, with battery sales volume up 39% to 661 GWh. Global power battery market share rose to 39.2% — its ninth consecutive year as the world’s top manufacturer. The gap between CATL and everyone else is widening, not narrowing.

Brutal times for the US battery industry — MIT Technology Review

24M Technologies — a battery startup founded in 2010 — is shutting down and auctioning assets. SK On is laying off 958 workers (37% of its Georgia plant workforce). Contrast this with CATL’s latest results…

Middle East energy shock revives interest in nuclear power — FT

Urenco’s CEO says a “nuclear renaissance” was already underway and will accelerate due to Hormuz-driven supply disruptions. The company’s order book hit a record $21.3B. Every energy shock since Ukraine has pushed nuclear further into the mainstream conversation.

Trump Administration fires new shot in fight over California clean car rules — NY Times

A new DOJ lawsuit targets California’s continued enforcement of EV mandates following Congress’s earlier action to block the 2035 gas car ban. Seventeen states representing over a third of the U.S. auto market follow California’s standards — so the stakes go well beyond Sacramento.

Stellantis weighs deals with Chinese rivals to shore up Europe — Bloomberg

Stellantis has held talks with Xiaomi and Xpeng about potential equity stakes in Maserati and other brands, as well as manufacturing capacity sharing. The strategic logic: Chinese capital and technology for European market access.

Honda Cancels Plans for Three News EVs as It Scrambles to Rethink Strategy - Gizmodo

“The Japanese automaker announced today that it has cancelled the planned launch of three new EVs. The shelved models are the Honda 0 SUV, the Honda 0 Saloon sedan, and the Acura RSX. The three vehicles were previously planned to be produced at the Honda EV Hub in Ohio later this year…The company expects to incur additional expenses and losses next year, and says its overall shift in EV strategy could end up costing as much as 2.5 trillion yen ($15.7 billion).”

QUICK HITS

• CATL’s results may widen $120B market cap lead over BYD — Bloomberg | Diverging trajectories: CATL accelerating, BYD facing its worst quarterly sales decline in five years.

• Solid-state EV battery patent reveals CATL’s ambitious plans - Electrek

• Green cement startup Sublime Systems lays off two-thirds of staff — Bloomberg | Lost an $87M DOE grant under the Trump administration.

• LG Energy to commercialize enhanced LFP battery model in 2027 — Bloomberg | Aiming to reposition LFP from low-cost commodity to higher-value storage solution.

• February slowdown for China’s NEV market — Electrive | Wholesale NEV sales down 14.2% YoY; elimination of purchase tax incentives adding pressure.

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Geopolitics and Economic Statecraft

Iran war sparks helium supply concerns for South Korea chip sector — Nikkei Asia

Qatar supplies 65% of South Korea’s helium imports — critical for cooling semiconductor wafers. Seoul has launched an emergency review of 14 semiconductor materials and equipment categories. The Hormuz closure is a chip supply chain problem, not just an energy problem.

US starts trade probe into China, EU in Trump’s tariffs revival — Bloomberg

USTR Greer has launched Section 301 investigations into 16+ economies — including China, the EU, Japan, South Korea, India, and Vietnam — focused on excess manufacturing capacity. The investigations are a prerequisite for unilateral tariffs. This is a broad escalation with major implications for critical minerals and clean energy supply chains.

Trump’s actions in Iran and Venezuela show limits of U.S. sanctions — NY Times

Maximum pressure campaigns on both countries ultimately failed to compel political change, and Washington shifted to direct engagement. CFR’s Edward Fishman: the Trump administration keeps setting goals that sanctions structurally cannot achieve.

QUICK HITS

• India eases investment rules for neighboring countries — Bloomberg

  Allows automatic approval for non-controlling stakes up to 10%, but BYD and other large Chinese firms still face ownership caps and regulatory hurdles.

• Asian exporters like Toyota fear losing out under ‘Made in Europe’ law — Nikkei Asia

  Japanese and Korean automakers want inclusion in the EU’s Industrial Accelerator Act procurement rules.

• Opinion: The White House’s oil-restraint toolbox is empty — Bloomberg

  Trump must either end the Iran conflict quickly or face political pain from sustained high energy costs.

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Reports

Solar Market Insight Report 2025 Year in Review - Solar Energy Industries Association

“The US solar industry installed 43.2 gigawatts direct current (GWdc) of capacity in 2025, a 14% decrease from 2024. The utility-scale sector shrank nearly 40% quarter-over-quarter in the fourth quarter. Revised tax credit timelines and safe harbor dynamics reduced the imperative to interconnect by year-end. They also increased the urgency to begin construction on new projects.

Solar accounted for 54% of all new electricity-generating capacity added to the US grid in 2025. Combined, solar and storage made up 79% of new capacity in this timeframe.

Podcasts/Webinars/Videos

Graphite’s Next Act: Evolving Demand, Chinese Supply Dynamics, and the Ex-China Premium - Benchmark Mineral Intelligence

FYP, GDP, and Ilaria Mazzocco on NEVs - Trivium China Podcast

Iran Conflict Brief: What It Will Take to Open Up the Strait of Hormuz - Columbia Energy Exchange

Mining and Minerals

Sulphur chokepoint threatens battery metals - Argus Media

“The widening conflict in the Middle East threatens to squeeze the supply of sulphur through the strait of Hormuz, with potential long-lasting second-order effects on key battery metals production.

The most immediate industrial vulnerability lies in sulphur produced in Mideast Gulf countries — and by extension sulphuric acid — a critical input for copper and cobalt leaching in the central African copperbelt, nickel leaching in Indonesia and lithium extraction and refining globally.

Roughly half of global seaborne sulphur trade transits the strait of Hormuz. With Middle Eastern refinery operations disrupted and shipping largely halted, global sulphur availability has tightened sharply. Africa is particularly exposed. Nearly all sulphur imported by southern African buyers last year originated in the Middle East.”

Canada secures 30 new critical minerals partnerships and unlocks $12.1 billion in mining project capital

Projects include Rio Tinto’s gallium extraction research and development project, E3 Lithium’s Clearwater Project, and Frontier Lithium’s lithium processing facility

Full list of projects can be found here

Canada Commits $2.6 Billion to Boost Critical Minerals Projects - Bloomberg

“Canada is moving closer to deploying around C$3.5 billion ($2.6 billion) in investments and programs to accelerate development of critical minerals deposits…The minister formally launched the C$1.5 billion First and Last Mile Fund, which was announced in Prime Minister Mark Carney’s November budget. It aims to build roads, transmission lines and other infrastructure to bring mineral deposits into production faster — addressing one of the sector’s biggest bottlenecks. Hodgson said the C$2 billion Critical Minerals Sovereign Fund — also announced in the budget — will begin operating in the coming months.

DR Congo government says 200 killed after landslide at rebel-held mine - BBC

“More than 200 people, including 70 children, have been killed after a landslide caused a collapse in a mining area in the east of the Democratic Republic of Congo, the government says. The landslide struck Rubaya, the country’s biggest source of coltan - an ore vital in the electronics industry - in the rebel-controlled east on Tuesday following heavy rains. In a statement, the mines ministry blamed the tragedy on M23 rebels and said they were allowing illegal mining without proper safety standards.

Rare earth yttrium hits new high, up 140-fold in 1 year on China curbs - Nikkei Asia

The price of yttrium, a rare-earth metal used in electronics and defense applications, has risen by a factor of around 140 since China started imposing new export controls in early 2025. The European price of yttrium -- a benchmark outside China -- reached a record $850 per kilogram as of Feb. 26 in data going back to 2012 from U.K.-based research firm Argus Media. A year earlier, a kilogram fetched only around $6. Further curbs imposed in 2026 on rare-earth exports to Japan have pushed prices up further over supply concerns.

Yttrium is notable among the many rare earths for its broad range of applications. It is commonly used in LEDs and medical laser devices, as well as coatings for components of semiconductor-manufacturing equipment. Defense applications include enhancing heat resistance in aircraft engines. The rise was triggered by export controls on seven rare earths announced by China in April 2025. The curbs included dysprosium, used in magnets for electric-vehicle motors, and yttrium, usually considered a heavy rare earth. China accounts for the majority of yttrium production.”

Not Just Oil: In Venezuela, U.S. Interior Secretary Pushes for Mining Access - NY Times

“With a couple dozen representatives of American mining companies and other firms in tow, the U.S. interior secretary, Doug Burgum, pushed for greater U.S. access to Venezuela’s reserves of critical minerals and gold during a visit to the country’s capital on Wednesday and Thursday…On Wednesday, Ms. Rodríguez pledged to work at “Trump speed” in accelerating U.S. access to Venezuelan minerals. She promised to introduce a new mining measure to national lawmakers in the coming days that would allow foreign companies to extract gold, diamonds and rare earths. She didn’t offer any further details about the possible proposal.”

Trump Team, Venezuela Broker Gold Export Deal, Axios Reports

“The Trump administration and Venezuela’s state mining company finalized a deal that would see the South American country selling as much as 1,000 kilograms of gold to US markets, the news website Axios reported on Wednesday. The deal would require the Venezuelan-owned Minerven to sell between 650 to 1,000 kilos of gold dore bars to the commodities trader Trafigura, Axios said, citing anonymous people familiar with the matter. Trafigura, according to the report, would then distribute the gold to US refineries under a separate arrangement.”

Vale Base Metals Aims to Be IPO-Ready by Midyear, CEO Says - Bloomberg

“Vale Base Metals is working to get its sprawling nickel-and-copper business ready for a potential initial public offering by midyear, sooner than previously indicated.

The task of bringing down costs, lowering capital intensity and accelerating the project pipeline is moving ahead at a faster clip than envisaged, Vale Base Metals Chief Executive Officer Shaun Usmar said on BNN Bloomberg Television. In June, he said the target for getting the unit of Brazilian miner Vale SA ready for a potential IPO was 2027.”

Africa should not pick sides in minerals race, says Zambia - FT

“Zambia is refusing to pick sides in the race between global powers for critical minerals, its president said, arguing that resource-rich African countries should resist pressure to align politically in exchange for investment. With copper prices still near record highs, Hakainde Hichilema told the FT that Africa’s second-biggest exporter of the red metal needs to focus on expanding its economy rather than choosing between Washington, Beijing or Brussels amid intense demand for minerals. “When I’m in Beijing, I’m not against Washington. When I’m in Washington, we’re not against Beijing,” he said in a recent interview. “We want to make sure that we do business with anyone . . . in a manner that will deliver mutual benefits.”

Teck Charges Korea Zinc More on Silver, Germanium in 2026 - Bloomberg
“Canadian miner Teck Resources agreed with Korea Zinc Co. to sell its zinc concentrates at a slightly higher processing fee in 2026, while charging more on silver and germanium after a surge in prices for both metals.

The treatment charge that Korea Zinc will receive for smelting semi-processed ores known as concentrates rose to $85 a ton this year, according to three people familiar with the matter, who asked not to be identified due to the commercial sensitivity of the matter. That’s a small rebound from this year’s $80-a-ton fee, which was the lowest benchmark level for the zinc industry in more than 50 years. Low processing fees tend to hit zinc smelters hard, as treatment charges have historically accounted for about a third of their revenues.”

New Rare-Earth Supply Falls Short of Rising Global Demand From EVs and Defense, BI Says - Bloomberg

“A wave of new rare-earth supply this decade won’t be enough to meet rising global demand, setting the stage for shortages and stronger pricing power for dominant supplier China and the handful of producers outside the Asian nation, according to a report from Bloomberg Intelligence.

Governments around the world are pushing to loosen Beijing’s dominance over rare-earth minerals needed for magnets used in vehicles, consumer electronics and defense technology. But even with billions of dollars in public funding for non-Chinese miners, supply deficits for the critical materials are still on the horizon, BI said. The report, published Monday, expects demand for key rare earth elements to climb about 7% annually through 2030, fueled by growth in electric-vehicle motors, consumer electronics and military uses.”

Japan in talks with India to explore for rare earths, sources say - Reuters

“Japan ​is in talks with India to jointly explore rare earth deposits in the desert state ‌of Rajasthan, two people familiar with the discussions said, as Tokyo seeks to reduce reliance on China for supplies critical to magnet manufacturing.

Last month, India’s Mines Minister G. Kishan Reddy said three hard rock rare earth deposits containing 1.29 million metric ​tons of rare earth oxides had been identified in Rajasthan and Gujarat state in western India. Following ​on a preliminary pact on critical minerals that Japan and India signed last year, ⁠Tokyo has expressed interest in the Rajasthan deposits and plans to send experts to the site, said ​the sources, who are directly involved in the decision-making. They declined to be named as the deliberations were ​not public.”

China lithium prices tumble as weak EV sales, Middle East war cloud demand outlook - Reuters

“Lithium prices in China plunged on Tuesday as weaker sales from major electric vehicle manufacturers and escalating Middle East tensions dampened demand prospects. The most-active lithium carbonate contract on the Guangzhou Futures Exchange fell 12.99% to close daytime trading at 150,860 yuan a metric ton, hovering near its 13% daily limit. The decline followed reports of softer February sales from several Chinese EV manufacturers, including industry leader BYD, whose EV sales plunged more than 40% year-on-year during the month.”

RANKED: Top 20 automakers by battery metals spending - Mining.com

A $40 billion copper boom in Argentina hinges on revamped glacier law - Mining.com

“The way Argentina’s president and some of the world’s biggest miners see it, all that stands between them and billions in copper riches are hunks of icy rock and overzealous legislation. That’s why, over the last year, executives from Glencore Plc, Lundin Mining Corp. and partner BHP Group have filed into Javier Milei’s presidential palace in Buenos Aires. These companies and others are keen to invest about $40 billion in Argentina’s untapped copper belt when miners worldwide struggle to keep pace with accelerating demand for the wiring metal…But glacial formations — some ice, some frozen rock — that sit atop sections of those vast deposits are in the way. Last year, Milei promised to quickly amend strict protections for the features that pose too much of a liability for miners to advance their projects.

Late Thursday, Argentina’s Senate approved Milei’s bill that would allow governors — many pro-mining — to overrule those federal protections on glaciers and their surrounds, known as periglacial areas. It now advances to the Lower House for a final vote in the coming days.”

A Copper Market Awash With Metal Sours Traders’ Bullish Mood - Bloomberg

“Now copper is caught in a jarring disconnect: the real-world metal market looks increasingly oversupplied, yet futures prices remain at near-record levels thanks to demand from bullish investors. But with excess supplies stacking up in the physical industry and worries over growth building, the crucial question is: how long can it continue?”

Energy Transition

BYD’s Second-Generation Blade Battery Makes Western EV Tech Look Ancient - InsideEVs

BYD made a big splash today by revealing its second-generation Blade battery with ultra-fast charging speeds. To support them, it’s also rolling out its new Flash charging stations, which can dispense more power than the megawatt chargers we saw last year…The second-generation Blade battery can charge from 10-70% in just about five minutes and from 10-97% in under 10 minutes. More impressively, the company showcased the battery charging flawlessly from 20-97% at -22°F (-30°C) in just about 12 minutes, only around three minutes slower than it charges in normal temperatures.

Still, these charging speeds are way faster than the 20-40 minute charging stops on the latest EVs in the U.S. The new BYD EVs can basically recharge in nearly the same time it takes to refill a gas car. Even the new 1,500 kilowatt (1.5 megawatt) Flash charging stations are arranged like a traditional gas station for cars to quickly drive in and drive out.

U.S. Automakers Risk Being Reduced to Niche Producers of Gas Vehicles - NY Times

“Auto experts say old-line companies risk becoming obsolete if they don’t learn how to make appealing, profitable electric vehicles, which most executives expect to eventually replace cars that run on gasoline despite the Trump’s administration efforts to promote fossil fuels. Improvements in electric vehicle technology mean that, within a few years, they will be cheaper to buy and will charge in 15 minutes or less.”

China solar boom helps energy emissions fall slightly in 2025 - FT

”China’s emissions from energy and industry fell slightly last year after a solar boom helped to meet a larger part of its growing power needs, according to official statistics, continuing a trend begun the year before. The data released at the weekend showed a 0.3 per cent decline in emissions from energy and industry during 2025. This was against the wider backdrop of a 3.5 per cent rise in total energy consumption.”

Middle East war strengthens case for renewables, says Microsoft energy chief - FT

”Microsoft’s global vice-president for energy Bobby Hollis, responsible for buying power for the tech group worldwide, said the oil and gas price surge had underscored the need for renewable energy in power supply as protection from volatile fuel costs. “Wind and solar as, as part of that mix, is a huge benefit from the standpoint of price stability, because once you install it you have more certainty around what that actual cost profile looks like,” he told the FT. “Fuel flexibility is always important, whether it’s a time of conflict or whether it’s a time of fuel scarcity, or changes in the fuel marketplace,” Hollis added. “That’s not a revolutionary idea.”

Germany’s Solar Boom Eases Power Costs as Gas Price Jumps - Bloomberg

“Germany is seeing unusually strong solar power output in March, helping to cap electricity prices even as the conflict in the Middle East drives up the cost of energy worldwide. The country’s solar installations will feed more than 40 gigawatts of electricity into the public grid at noon on Friday for the fifth day in a row, according to data from the Fraunhofer Institute. Last year, there were only four days with this level of solar generation in the entire month of March.

“In the short term, high solar output definitely dampened prices,” said Stephan Späth, meteorologist and power trader at ANE. “It was very sunny not only in Germany, but also in neighboring countries.”

Lawmaker Urges Bessent to Scrutinize US Access for Chinese Cars - Bloomberg

The Michigan Republican who chairs the Congressional Select Committee on China urged Treasury Secretary Scott Bessent to closely scrutinize any expansion of US market access for Chinese manufacturers of cars, batteries and vehicle technology.

In a letter to Bessent, US Representative John Moolenaar said that China has subsidized and taken other steps to give its domestic automakers an unfair competitive advantage. “Allowing Chinese automakers to establish footholds in US production or technology partnerships would import Chinese distortions directly into the American industrial base,” Moolenaar said in the March 5 letter.

A Nuclear Reactor Backed by Bill Gates Gets Federal Approval to Start Building - NY Times

“A novel type of nuclear power plant in Wyoming backed by Bill Gates received a key federal permit on Wednesday, making it the first new U.S. commercial reactor in nearly a decade to receive clearance to begin construction.

The Nuclear Regulatory Commission, the federal body that oversees reactor safety, unanimously voted to grant a construction permit to TerraPower, a start-up founded by Mr. Gates. TerraPower is one of several companies trying to build a new wave of smaller, advanced reactors meant to be easier to build than the large reactors of old. The permit, which comes after years of consultations and regulatory reviews, means that TerraPower can begin pouring concrete and building the nuclear components of its proposed nuclear plant in Kemmerer, Wyo. The plant, which still faces plenty of logistical hurdles, is currently expected to come online in 2031 near an old coal-burning power plant that is slated to retire a few years later.”

BYD’s February sales fall by most since pandemic - FT

“BYD sales fell by their biggest amount in five years in February as the Tesla rival’s pivot to export markets failed to offset slowing growth at home.

The world’s biggest electric vehicle maker reported February sales dropped 41 per cent year on year to 190,190. The decline was driven by a 65 per cent drop in domestic sales and came despite export sales surging 50 per cent. The February sales data, which was released by the company on Sunday evening, marked the sixth straight month of declines for BYD. The slump has highlighted the need for Chinese carmakers to increase sales abroad as EV growth moderates at home following years of rapid expansion.”

BYD redraws global EV map, overtaking Tesla in 20 markets - Nikkei Asia

Chinese automaker BYD is transforming the electric vehicle market, surpassing Tesla's sales in more than 20 countries and regions over the past five years as it embraces risk and expands globally to overcome waning sales at home.

Michael Bloomberg: Cap and Trade Works in Europe. Don’t Screw It Up - Bloomberg

“Few policies have done more to combat climate change than the European Union’s emissions trading system. By putting a price on carbon dioxide — currently about €70 per metric ton — it has given companies throughout the bloc a powerful incentive to invest in going green. Europe’s leaders should stand by it — and improve it — rather than bowing to industry pressure to walk away from it.”

How China Built a Big Lead in Global Race for Batteries That Last for Days - Bloomberg

China is quietly dominating yet another area of the global energy transition: long-duration energy storage.

LG Energy Solution picks L&F over parent LG Chem for Tesla battery cathodes - Korea Economic Daily

LG Energy Solution Ltd. has chosen L&F Co. as the primary supplier of cathode materials for batteries used in Tesla Inc.’s electric vehicles and humanoid robots, bypassing its parent LG Chem Ltd. for the first time in favor of ultra-high nickel battery materials.

Industrial Accelerator Act adds Made in EU requirements for automakers -Benchmark Mineral Intelligence
The Industrial Accelerator Act lays out the requirements for an electric vehicle to be defined as “Made in EU”, with these rules coming into play after the regulation officially enters into force:

1. The vehicle must be assembled in the EU.

2. At least 70% by value of its non-battery components must be of EU origin.

3. For the battery, at least three “main specific components” must be of EU origin, including at least one cell. The other components include modules, packs, cathodes, anodes, electrolytes, separators, current collectors, battery management systems (BMS), and/or battery thermal management systems (BTMS).

Geopolitics and Economic Statecraft

Iran Conflict Sparks Global Rush For Critical Fertilizers - Bloomberg

“The US and Israel’s attacks on Iran, and Tehran’s retaliation across the Middle East, have disrupted supplies of fertilizer, and farmers worldwide are rushing to secure critical nutrients. Around a third of global fertilizer supply passes through the Strait of Hormuz, a nautical passage between the Persian Gulf and the Arabian Sea, which Iran has promised to shut to shipping. Prices of natural gas — a crucial element in fertilizer production — are soaring globally.”

US Considers Requiring Permits for Nvidia, AMD Global AI Chip Sales - Bloomberg

“Officials at the US Commerce Department have written draft regulations that would restrict AI chip shipments to anywhere in the world without American approval, giving Washington broad control over whether other countries can build facilities for training and running artificial-intelligence models — and under what conditions.

The proposed rule — which could change substantially or be shelved entirely — would require companies to seek US permission for virtually all exports of AI accelerators from the likes of Nvidia and Advanced Micro Devices Inc., a global expansion of curbs that currently cover around 40 countries, according to people familiar with the matter. These chips are the most coveted components in the tech world. Companies like OpenAI and Alphabet Inc. buy them by the thousands to install in data centers that run services like ChatGPT and Gemini.”

The First 36 Hours of War Consumed Over 3,000 U.S.-Israeli Munitions - Foreign Policy

“The first 36 hours of the U.S.-Israeli campaign against Iran consumed more than 3,000 precision-guided munitions and interceptors, exposing a critical vulnerability in the supply chain. Much is unknown about the future of the war and its wider implications, but one thing is clear: the need to replenish munition stockpiles.

Utilizing a proprietary Payne Institute open-source ledger and data-scraper tool that breaks out minerals and materials from demand scenarios, our team—drawing from the technical expertise across the Colorado School of Mines—conservatively identified the number of Iranian missile launches and drone attacks across the Middle East during the first 36 hours of the conflict”

US Government Announcements

Defense Industrial Base Consortium (DIBC)- Domestic Processing Capabilities of Critical Minerals

Industrial Base Policy “aims to incentivize the development of robust, resilient, and secure domestic supply chains for critical minerals essential for national security and defense applications. This AOI requests project solutions that address critical gaps in the domestic production capacity for the following commodities:

Defense Logistics Agency Seeks Information on Stockpiling

The DLA, within the DoD, is seeking information on five minerals to potentially purchase them for stockpiling. Minerals and their amount are below.

Department of Defense Invests $27M for the Domestic Excavation, Extraction, Processing, and Refinement of Antimony

The Department of Defense announced today a February 24, 2026, investment of $27 million in Defense Production Act (DPA) Title III funds to U.S. Antimony Corporation (USAC) for the domestic extraction, processing, and refinement of antimony.

USTR - Request for Comments on the Design of a Plurilateral Agreement on Trade in Critical Minerals and Policy Actions To Strengthen the Resilience of Critical Mineral Supply Chains

“USTR invites comments from interested parties to inform the development of trade policy that supports and enhances the resilience of critical mineral supply chains and downstream industries that depend on them.”

Go in depth - Latest Reports

Lithium demand could exceed 13 million tonnes by 2050 as energy transition accelerates - Wood Mackenzie

“Global lithium demand could exceed 13 million tonnes by 2050 under an accelerated energy transition, more than double base case projections, according to Wood Mackenzie’s latest Energy Transition Outlook for Lithium. Without significant new investment, supply deficits could emerge as early as 2028. Even under the Wood Mackenzie’s base case scenario, existing supply projects are unlikely to meet demand beyond the mid-2030s, highlighting the need for sustained investment across the value chain.”

Podcasts/Webinars/Videos

War with Iran Is a Nightmare for Oil and Gas. How Will it Impact Clean Energy? -Bloomberg Green

The Widening Middle East Conflict and Its Impact on Energy - Columbia Energy Exchange

The War on Iran - Ones and Tooze

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There is no bigger news this week than the conflict in the Middle East and it feels weird to write about anything else as people continue to die. I highly recommend following my colleagues at the Center on Global Energy Policy at Columbia to understand how the war is impacting oil and gas markets. However, I wanted to briefly touch on China’s decision to limit exports to a group of Japanese companies.

What happened?

During the last week of February, China introduced export restrictions on 40 Japanese companies signaling Beijing's animosity toward Japan has not relented. China continues to try and pressure Japan following Prime Minister Takaichi’s comments on Taiwan in the fall. China specifically stated that one reason for the restrictions was to “curb Japan’s ‘remilitarization’ and nuclear ambitions” but this is a continuation of China’s attempts to pressure the new Prime Minister. (Those efforts have not worked, and Takaichi recently won a resounding victory in Japanese elections)

Twenty Japanese companies were added to an export control list. Companies in China are restricted from shipping dual-use items to them. Dual-use items are materials or technology that have civilian and military applications. It is important to note that overseas companies cannot supply these companies if the original dual-use technology originated in China.

An additional 20 companies were added to a watch list. According to Nikkei “Companies exporting dual-use items…from China to the listed entities will need to submit a risk assessment report and a written commitment that the items will not be used to enhance Japan’s military strength, the ministry added.”

A full breakdown of the companies is below.

This follows China’s action in January to ban the exports of dual use goods to Japan. Once again, according to Nikkei, “China's Ministry of Commerce announced on Tuesday that it would immediately tighten restrictions on exports to Japan of dual-use items -- goods or technologies that have both civilian and military applications. It will prohibit exports of such items to Japanese customers involved in military activities and ban all exports that could enhance Japan's military capabilities.

What will the impact be?

Prime Minister Takaichi has promised to increase defense spending with a goal of reaching a 2% of GDP target ahead of schedule. China is the leading producer of key defense related minerals including rare earth elements, antimony, gallium, germanium, and tungsten. As the chart from Bloomberg shows, despite strong actions to diversify REE supply chains away from China, Japan still relies on China.

But Japan’s government and private sector are acutely aware of the threat and have a large array of policy tools to continue to diversify. I do not know enough about Japanese imports to know the degree of challenges they now face but I wanted to flag the comment below from the Chairman of Mitsui, a major Japanese trading company. Mitsui has received significant backing from Warren Buffet’s Berkshire Hathaway. One of their subsidiaries was added to the watch list.

From Nikkei

Tatsuo Yasunaga, head of the Japan Foreign Trade Council, said on Wednesday that while the latest measure is aimed at Japanese companies and institutions, there are cases where components using the banned items are supplied to consumers and manufacturers in Europe and the U.S.

“In other words, this represents a challenge to the global supply chain as a whole,” Yasunaga said at a news conference. “From that perspective, coordinating with the European Union and the U.S. to promote diversification of supply sources is not solely Japan’s issue [but a global one].”

If you build it, you will use it

Pardon the messy Field of Dreams reference, but China’s recent actions point to their increased willingness to use the export restrictions regime they have built over the last few years. During previous export related disputes, Chinese action was less formal.

However, they have institutionalized the restrictions and created a legal apparatus to support the implementation of restrictions over the last few years. Through the Ministry of Commerce (MOFCOM) they have placed export restrictions on large subsets of commodities, technologies, countries, and now specific companies. The regime allows them to do it more legally and forces companies to give them specific details about end-use applicants. This gives the Chinese government more insight on global supply chains and markets.

This regime should look familiar. As I wrote before, China has more or less copied the U.S. model by creating an apparatus to take advantage of their chokepoints.

But these latest actions from China show they are once again copying the U.S. If a country builds up the legal regime and governments institutions to support economic statecraft - whether it is for sanctions, export restrictions, tariffs, etc - they will use it. History suggests that once states acquire these tools, the tendency is to deploy them more frequently and more aggressively over time. That has been the story of the last 30 years of American foreign policy (read Chokepoints). And we should now expect the same from China.

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Below is my first iteration of a weekly news roundup. I am still playing around with the format but the goal is to share key updates on critical minerals, energy transition, geopolitics, and things I find interesting. Please let me know if there are topics I should cover for future iterations. Have a great weekend!

Mining and Minerals

Trump eyes Pentagon AI program for trade block’s minerals pricing - Reuters

“The Trump administration plans to use a Pentagon-created artificial intelligence program to help set reference prices for critical minerals as it works to build a global metals trading zone, three sources with direct knowledge of the effort told Reuters…Trump officials are initially focusing OPEN’s AI pricing model on at least four critical minerals, including germanium, gallium, antimony and tungsten, before expanding to others, with S&P Global and Finnish data firm Rovjok supplying data and other technical assistance, according to the sources.

MP Materials selects Texas for rare earth magnet manufacturing site - CNBC

“MP Materials has chosen Northlake, Texas, for its new $1.25 billion rare earth magnet manufacturing campus, the company announced Thursday…Once operational, 10X will produce about 7,000 metric tons of rare earth magnets annually, bringing the company’s total production to 10,000 metric tons per year….The factory is expected to begin production in 2028 and create 1,5000 direct manufacturing and engineering jobs at the site.”

Japan mines Pacific Ocean mud for rare earths to counter China’s chokehold - FT

“Japan is embarking on an ambitious effort to retrieve rare earth elements from the ocean floor as it seeks to loosen China’s grip over the metals vital to missiles, radar systems and drones.

Japan Leans More on China for Rare Earths Despite Lower Imports - Bloomberg

“China supplied around 76% of the rare earths imported by Japan in January, according to data compiled by Bloomberg from Japanese customs figures. This was 3.4 percentage points more than the proportion for the same month a year earlier, as imports from other nations fell.”

Column: West needs its own pricing to escape China’s rare earths grip - Reuters

US faces 'decadelong' road to loosening China's grip on rare earths - Nikkei Asia

“Washington deploys billions and builds Asian partnerships, but refining remains key hurdle”

Rare earth shortages worsen in US aerospace, chips despite trade truce - Reuters

“Suppliers to US aerospace and semiconductor firms face worsening rare earth shortages, with two turning away some clients, industry insiders said, weeks before US President Donald Trump is expected to meet his Chinese counterpart Xi Jinping for a summit in Beijing.

The shortages center on rare earths such as yttrium and scandium, niche members of the family of 17 elements, which play tiny but vital roles in defence technology, aerospace and semiconductors and are almost entirely produced in China.”

Sacked Congo state miner chiefs opposed Virtus–Chemaf takeover - Reuters

“The Democratic Republic of Congo replaced the CEO and chair of state miner Gecamines in part because of their opposition to US-backed Virtus Minerals’ plan to buy cobalt and copper producer Chemaf, three people familiar with the matter said.

As Kinshasa seeks to develop a minerals partnership with Washington, President Felix Tshisekedi on Monday removed Guy Robert Lukama and Placide Nkala Basadilua as Gecamines chair and CEO respectively, replacing them with Deogratias Ngele Masudi and Baraka Kabemba.”

Congo's cobalt curbs expose China's critical metals weak spot - Reuters

“…That vulnerability has been exposed by the export controls imposed by the Democratic Republic of Congo, the largest source of cobalt intermediate products for Chinese processors.

Congo suspended cobalt exports in February last year and introduced a quota system in October.

Shipments to China then ground to a near standstill over the fourth quarter of last year, with local prices now surging amid a scramble for units.”

Zimbabwe suspends lithium exports, sending prices soaring - Semafor

“Zimbabwe suspended lithium exports in a bid to pressure firms to set up domestic processing facilities, sparking fears of supply chain disruptions and sending prices soaring. The move caused Chinese lithium futures to rise more than 9% on Thursday. Like other commodity-exporting African nations, Zimbabwe wants to capture more value across the supply chain, with at least 13 African countries imposing similar export restrictions since 2023. However, progress on setting up processing plants remains slow”

What does Albemarle’s idling of Kemerton mean for Australia's lithium outlook? - Benchmark Mineral Intelligence

Trafigura signs USD1.1 billion loan agreement to support the long-term supply of critical metals to German industry

Trafigura, a market leader in the global commodities industry, has signed a USD1.1 billion five-year loan to support the long-term supply of critical metals into Germany, reinforcing the country’s efforts to secure raw materials for its industrial, energy and technology sectors…The agreement marks Trafigura’s third guaranteed facility with Euler Hermes, following a USD800 million five-year loan signed in 2022 for the supply of refined non-ferrous metals, and a USD3 billion four-year loan signed in 2022 to secure German gas supply.

Energy Transition

The Car World Is Going Electric, Without America - The Free Press

“The EV transition has not failed. It is winning—just not here and not by Detroit. There are no shortcuts. Building a world-class EV and battery industry requires that America commit to 10 years of uninterrupted, intense effort. We should also pool resources and investments with our allies—Japan, Korea, and Europe—to achieve the innovations, manufacturing scale, and lower costs that can match China.

The question now is whether America will watch from the sidelines as the rest of the world moves on—or finally get serious about joining the race.”

Why Chinese wind power firms won’t give up on Europe - Semafor

“Geopolitical tensions between Beijing and European capitals will not stop Chinese wind turbine manufacturers from expanding into Europe, the international head of one of China’s biggest wind turbine manufacturers said in an interview, characterizing their arrival as coming “sooner or later.”

BYD’s Cheap EVs Are Suddenly Everywhere in Mexico as Tariffs Take Hold - Bloomberg

“Mexico City is abuzz with cheap, battery-powered compacts made by the likes of China’s BYD Co. The world’s largest EV-maker nearly doubled its Mexican sales volume last year and now accounts for about seven of every 10 electric and plug-in hybrid vehicles sold there, according to estimates from BloombergNEF.”

US Solar Tariffs Roil India’s Glut-Stricken Panel Makers - Bloomberg

“A new, 126% US tariff on solar imports from India has battered shares in major exporters, as investors brace for the impact on a once-booming industry already struggling with overcapacity and price pressure.”

Electric Vehicle Sales Boom as Ethiopia Bans Fossil-Fuel Car Imports - Bloomberg

“In 2024, the Ethiopian government banned the import of fossil fuel-powered vehicles and slashed tariffs on their electric equivalents. It was a policy driven less by the country’s climate ambitions and more by fiscal pressures. For years, subsidizing gasoline for consumers has been a major drag on Ethiopia’s budget, costing the state billions of dollars over the past decade. The country defaulted on its sovereign bonds in 2023 after rising interest rates drove up the costs of servicing its debts, and it received a $3.4 billion bailoutfrom the International Monetary Fund the following year.

In the two years since the ban on internal combustion engine vehicles, EV adoption has grown from less than 1% to nearly 6% of all of the vehicles on the road in the country — according to the government’s own figures — some way above the global average of 4%.”

Billions in Climate Grants, Frozen for a Year, Are Back in Court - NY Times

“A lawsuit involving billions of dollars in climate grants is headed back to court on Tuesday, more than a year after the Environmental Protection Agency tried to cancel the awards and claw back the money.”

Net Zero Is Dead. Long Live Renewable Energy - Bloomberg

“While renewables will erode the market share of fossil fuels, it will take a long time. By 2050, global energy-related CO2 emissions will remain well above the amount envisaged by net zero. But increasingly it looks like emissions will soon peak as the growth in demand for coal flattens out. Bending the annual curve down toward 30,000 million metric tons, and perhaps even to 25,000 metric tons, looks increasingly realistic. But, at risk of stating the very obvious, that’s well above zero.”

Uber Will Offer Incentives for E.V. Charger Construction - NY Times

“Uber said on Wednesday that it would offer incentives to other companies to install electric vehicle chargers in the United States and Europe, a potential boost for a part of the car market that has been hurt by recent U.S. policy changes.

The company said it would guarantee that chargers installed in neighborhoods where its drivers lived or often picked up or dropped off passengers would be used a minimum amount of time. The offer should allow charging operators to more quickly recoup their investment in new stations. How much chargers are used is a key to whether they make or lose money but difficult to predict.”

Don't look now, but the green transition is still happening - NY Times

US Automakers Caught in Crossfire of Trump, California EV Battle - Reuters

U.S. Adds 58 GWh of New Energy Storage Capacity in 2025, Largest Single Year of New Battery Capacity on Record - The Solar Energy Industries Association (SEIA) and Benchmark Mineral Intelligence

Geopolitics & Economic Statecraft

Trump’s Push for a US Sovereign Wealth Fund Transforms an Agency - Bloomberg

“The US International Development Finance Corp. intends to shift its investment priorities to balance its currently authorized development financing with a greater focus on returns as it advances US foreign policy interests, according to the Feb. 20 memo. DFC aims to target strategically important sectors using a number of different asset classes to deploy its more than $200 billion in financing capacity.”

China Hits Japanese Firms With Export Bans - Wall Street Journal

“China banned the export of critical minerals and other goods with potential military uses to several major Japanese companies, further escalating its pressure campaign against Tokyo over remarks Prime Minister Sanae Takaichi made about Taiwan…

The ministry said 20 Japanese companies have been added to an export control list that prohibits Chinese firms from selling them dual-use items that could have military applications. Prohibited items include rare earths used in motors and magnets, machine tools, batteries and chip-making equipment.”

Sanae Takaichi plans Japanese ‘Cfius’ to tighten economic security - FT

“Japan is planning to tighten scrutiny of foreign investment, emulating the US with a new body to strengthen economic security that overseas companies and activist investors hope will streamline a complicated vetting process.”

The cyber security threat inside your car - FT
"..Note that the first country to act on these risks was China. Beijing imposes limits on cars’ data transfer, in addition to informal restrictions on where Tesla cars can drive. Yet when the US followed suit by banning connectivity and autonomy components from China, many in Europe thought Americans were paranoid.”

Go in depth - Latest Reports

Why Are Chinese EVs So Cheap? - Rhodium Group

Copper in the Age of AI: Challenges of Electrification - S&P Global

Podcasts/Webinars/Videos

Supreme Court’s Tariff Ruling: What It Means for Energy - Columbia Energy Exchange

Copper Prices Unpacked: What Peak Margins Mean for Profits, Projects and M&A - Benchmark Mineral Intelligence

The State of the Transport Transition - BNEF

The Strategic Metals Awakening - Money of Mine

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The Trump Administration moved forward with a series of critical minerals announcements last week that culminated in the Critical Minerals Ministerial at the State Department on February 5th. The most impactful news is that the United States will move forward on price floors/support through trade mechanisms. I previewed this in my last post on price floors. I finished that post saying there are several key questions that need to be answered including, "what countries will sign up for this? How will the strike price be formulated? How will the trade mechanisms be implemented? How will these mechanisms impact domestic manufacturing?”

Unfortunately, we still do not have answers for these questions but below I break down a few questions on the potential new critical minerals trading bloc.

What is the Trump Administration proposing?

The Trump Administration is proposing a trading bloc built around tariff-based price floors to protect domestic and allied producers from being undercut by cheaper imports.

Vice President J.D. Vance spelled out what the Administration aims to do at the Critical Minerals Ministerial.

“So, this morning, the Trump Administration is proposing a concrete mechanism to return the global critical minerals market to a healthier, more competitive state – a preferential trade zone for critical minerals, protected from external disruptions through enforceable price floors. We will establish reference prices for critical minerals at each stage of production, pricing that reflects real-world, fair-market value.

And for members of the preferential zone, these reference prices will operate as a floor, maintained through adjustable tariffs to uphold pricing integrity. We want to eliminate that problem of people flooding into our markets with cheap critical minerals to undercut our domestic manufacturers” - 2/5/26

Has this idea been pitched before?

The Biden Administration pitched an idea for a critical mineral trading bloc towards the end of their Administration. The idea was spearheaded out of the National Security Council (NSC) and focused on countries (both consumers and producers) signing up for a trading bloc where they agreed to certain standards for mining and processing facilities. Countries that were members of the bloc would agree on standards and tariffs, with material outside of the bloc facing higher tariffs. However, the idea was dropped following President Trump’s electoral win in 2024. The idea did not get out of the initial idea process, but it was pitched to several foreign capitals. The proposal needed significant iteration, and it was a long-term play (5-10 years). The Trump approach differs by centering on price protection rather than standards compliance, though both share the goal of creating a protected trading sphere outside Chinese influence.

Who will sign up for the Trump Administration trading bloc?

The two most immediate (and important) targets for the bloc are the European Union and Japan. The EU and US agreed to move forward on a memorandum of understanding (MOU) with the ultimate goal of a plurilateral trade initiative between the EU, Japan, and US. The initiative “could include exploring the development of coordinated trade policies and mechanisms, such as border-adjusted price floors, standards-based markets, price gap subsidies, or offtake-agreements.”

The Administration also announced 11 MOUs with countries, including Argentina, the Cook Islands, Ecuador, Guinea, Morocco, Paraguay, Peru, the Philippines, the United Arab Emirates, the United Kingdom, and Uzbekistan related to critical minerals.

But it is important to remember that there is a big difference between signing an MOU or framework and signing up for specific trade or tariff rules. Turning these MOUs into actual legal mechanisms will be challenging. Just looking at the list of 11 MOUs, several have significant Chinese investment in the critical minerals sector or China is a key export partner for commodities. Countries like Argentina (lithium), Peru (copper, zinc), Guinea (bauxite), and Morocco (phosphates) have deep or emerging commercial relationships with Chinese buyers and Chinese-financed mining projects. Asking these countries to potentially sacrifice access to their largest customer or accept Chinese retaliation in exchange for access to a protected but smaller market will be challenging.

I will be watching a few partners closely to see how real this becomes.

• South Korea is a wild card. It is serious about diversifying supply chains (they were the Chair of the MSP and its successor) and is home to the leading non-Chinese companies in key supply chains. But South Korea was not as forward leaning as Japan nor were they affected by the previous export restrictions as strongly. Their battery champions have Chinese supply chain exposure, and Seoul will weigh the costs of Chinese retaliation heavily against the benefits of bloc membership.

• Europe is vital for the success of this trading bloc. Germany has been similar to South Korea and will be interesting to watch. But as I wrote on Greenland, the Trump Administration could not have picked a worse time. An op-ed from the Financial Times sums up the thought of Europeans and most likely many other countries when discussing the topic.

  These are not negotiations between free and equal partners: they are proposals by a mafia boss. It’s bizarre that the Trump administration is solemnly proposing a market-based mineral supply system while simultaneously threatening to annex Greenland after eyeing up its natural resources.

  Europe is also trying to figure out how to balance the growing animosity from Washington and its relationship with China. As Noah Barkin reported in his great Substack, Watching China in Europe, the EU will be worried about retaliation.

Nor, they said, has the administration thought through a range of second-order risks, from tariff circumvention to Chinese retaliation. “What if China decides to impose wide-ranging export controls on every country that signs up to this? Would the Americans be there to protect us?” the senior EU official said.

How will the price floors be created?

We do not know yet. And reporting from Barkin suggests the Administration has not formulated a plan yet either.

One senior EU official told me that the Trump team was flying by the seat of its pants. None of the technical work required to game out the impact of price floors appears to have been done.

My sources suggest the same. This includes the impact or what the price floor should be.

This will be very very hard. And I really cannot stress that enough. Setting reference prices (which seems to be the word everyone has decided to use) requires answering several analytically complex questions: Which point on the cost curve do you protect? The 50th percentile producer? The 75th? Do you use current spot prices, long-term contract prices, or historical averages? How do you account for different ore grades, processing technologies, and energy costs across regions? Do you set separate reference prices for each processing stage or use integrated pricing? If reference prices are set based on lobbying rather than strategic analysis, the mechanism could protect inefficient operations and severely inflate costs for downstream manufacturers.

If anyone is going to do the work though it is Japan, through their experts at Ministry of Economy, Trade and Industry (METI) and JOGMEC. I hope their analytical rigor and experience can provide a reality check on what is technically feasible and economically sustainable.

What minerals will be the focus of the price floors?

The announcements did not specifically announce what minerals they will focus on. But based on the current Administration’s interests, minerals that are vital for defense applications are the most likely choices in addition to those that have high market concentration/face export restrictions in China. This would include rare earths, graphite, gallium, germanium, and tungsten, antimony at the minimum. I would also guess cobalt and lithium too.

How will China react?

None of this is happening in a vacuum. China will react in some manner to these actions. The Foreign Ministry stated they are against a country “undermining the international economic and trade order through setting rules for a ‘small-circle.” Their comments should be taken with a pinch of salt but members of the trading bloc will need to think through how to respond when China reacts. The immediate threat is direct retaliation for anyone that signs up for the bloc, but Chinese firms could also game the system and be real winners. As I wrote recently on Indonesia, Chinese firms are nimble.

Chinese mining firms are active in South America, Africa, Southeast Asia, and Australia and they could earn a premium by selling into the trading bloc, instead of selling to China.

Basic example of how Chinese firms could benefit

If the reference price is set at $80/ton for a generic commodity but Chinese-owned mines in Africa can produce at $40/ton, those operations could sell into the protected bloc at $75/ton—above their cost but below the tariff-protected floor—and capture enormous margins. The trading bloc would effectively transfer rents to Chinese mining companies operating outside China. And the importer in the U.S. or Europe would be paying the difference.

We could also see Chinese firms actively work to gain ownership stakes in mining projects in jurisdictions that face lower tariffs (which has been previously proposed). This creates a dilemma for investment screening. There will be a push for investment screening (similar to CFIUS) but it will be difficult to block the sale of assets to Chinese buyers for several reasons:

Often Chinese firms are the only companies looking to buy assets. They are supported by lower cost capital from Chinese development or infrastructure banks. Western mining majors are more conservative about capital allocation and less willing to acquire marginal assets, while junior miners often lack the balance sheets to expand. Chinese state-backed firms have more patient capital.

In many resource rich countries, mines provide significant revenues to the national government and provide jobs to the local economy. It will be difficult to ask countries to not sell assets to a Chinese buyer if they are the best or only potential buyer. It is more difficult if China is on the other line pressuring the country or offering domestic spending. Countries like Zambia, the DRC, or Peru face a credible threat: block Chinese investment and face Chinese retaliation on existing trade relationships, or accept Chinese buyers and maintain economic ties. The trading bloc offers potential market access but no guaranteed investment capital to replace Chinese buyers.

Mining companies are predominantly publicly listed companies with a fiduciary duty to their shareholders. If a Chinese firm offers the highest bid for an asset, management cannot simply reject it on geopolitical grounds without risking shareholder lawsuits—unless their home government explicitly blocks the transaction through investment screening.

Project Vault

In addition to the price support, the Trump Administration also launched Project Vault, a commercial stockpiling initiative backed by a $10 billion loan from Export-Import Bank of the United States (EXIM). Details remain sparse so I will hold off on writing in detail about it but two quick thoughts:

1. This is not the equivalent of the Strategic Petroleum Reserve, despite headlines describing it that way.

2. Their decision to partner with three commodity trading firms - Mercuria, Hartree, and Traxys - is a positive signal. No one in the USG had the market expertise to run a commercial stockpile and it was smart to hand it over to the experts. How they balance commercial/security interests will be the question going forward.

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TL;DR - Price floors come in many forms but the Trump Administration set expectations that they would create price floors using a contract for differences scheme. They now seemed focused on using trade mechanisms to create price floors. But the Administration should have been clearer with the market.

Last week, Trump Administration officials told mining executives "we're not here to prop you guys up" with price floors. Two weeks earlier, the same Administration released a report calling for price floors on critical minerals. Both statements can't be true—or can they?

The confusion comes from yesterday’s (1/29) Reuters reporting on recent comments from the Trump Administration on price support for critical minerals.

At a closed-door meeting this month hosted by a Washington think tank, two senior Trump officials told U.S. minerals executives that their projects would need to prove their financial independence without government price support, three attendees told Reuters.

“We’re not here to prop you guys up,” Audrey Robertson, assistant secretary of the U.S. Department of Energy and head of its Office of Critical Minerals and Energy Innovation, told the executives, according to this account. “Don’t come to us expecting that.” - Reuters

This language seemed to go directly against Administration comments including their own release on the Section 232 investigation into "processed critical minerals and their derivative products (PCMDPs)." Just two weeks ago, they said

…the Secretary and the Trade Representative should consider price floors for trade in critical minerals and other trade-restricting measures.

So did Reuters get the reporting wrong? Is the White House lying in the 232?

No, the Reuters reporting and the 232 investigation comments can both be correct. In fact, they are probably both right. The problem is twofold

1. Price floors come in several forms and people are talking past each other.

2. Due to previous Administration comments and actions, people assumed price floors would look a certain way and now they have decided to use their favorite tool (tariffs) to implement them.

Below I breakdown what price floors are, how they can be implemented, and why the Trump Administration’s comments and actions are at fault for the confusion.

What are Price Floors?

At a basic level, a price floor is a market intervention where the government designates the minimum price for a commodity. The price cannot drop below the “floor” and if it does, the producer is either compensated through a government pay out or the product is not allowed into the market at that price.

The aim of price floors is to protect domestic producers from either price fluctuations or low prices. In terms of critical minerals, experts and mining companies believe price floors are necessary to compete against Chinese production. Reasons for that include lower environmental standards, state subsidies, state-owned enterprises, price manipulation, or a willingness in China to accept periods of losses to drive out competition.

There are two main goals of price floors:

1. Protect producers of key minerals to ensure a stable supply.

2. Crowd in private investment by giving price certainty and lowering risk.

However, price floors can be implemented in several ways. Below are two examples - contract for differences and trade mechanisms.

Price floors as a Contract for Differences

For the last 7 months, the main way people have discussed price floors is through a contract for differences (CfD) scheme. In this form, the government pays a producer the difference between the market price and the price floor. CfDs have been utilized in renewable energy to help bring wind and solar onto the grid.

But the main reason CfDs have been at the forefront of the conversation on price floors is because one is included in the DoD - MP Materials deal. In that deal, the DoD agreed to a 10-year price floor for neodymium-praseodymium (NdPr) oxide, set at $110 per kg. If the price falls below the floor, the government pays the difference.

The graph below demonstrates a CfD scheme at a basic level for a generic commodity. In this scenario, the price floor is set at $90/ton.

Under this policy, the government would pay the producer $13 per ton sold in January in order to make up the difference between the market price and floor price. In April, it would be $10. But in May, when the market price is above the floor price, the government would not pay the producer since the price is $95. And in some circumstances, the government would actually be entitled to a share of the profit when the market price exceeds the floor price. (This is included in the MP deal)

Beyond deciding what the floor price should be, the biggest challenge to this approach is that it can be very costly. The taxpayer is forced to subsidize the production of the commodity and the bill for this scheme can quickly balloon. A larger scheme beyond a single mine or manufacturing facility would require Congressional appropriations. This intervention can also be very distortionary and inefficient. The government should not provide support for mines or facilities at the high end of the cost curve or that are poorly run.

However, this intervention is not inflationary compared to trade barriers as the cost of the higher commodity is not passed onto the downstream users or consumer.

Price floors through trade mechanisms

The other form of intervention is creating a price floor through trade barriers or tariffs. The government creates a minimum price through enacting trade barriers that prevent a commodity from entering the market unless they meet a certain price. Below are a few examples on how you could do that (but it is not an exhaustive list).

The graph below shows an example of a “minimum import price” at a basic level for a generic commodity. In this scenario, the price floor is set at $90 but the market price for the commodity is below the price floor during several months.

The commodity would not be allowed to be imported into the country at the market price. Instead, the importer would be forced to pay the difference in the form of a tariff to the government. But the commodity would be allowed into the country without issue when the market price is above the price floor. The United States basically creates a minimum price through anti-dumping and countervailing tariffs.

Another example would be a “specific tariff” mechanism - a fixed dollar amount charged per unit of imported goods (per ton, gallon, unit, etc.), regardless of the product's value. Think of it as a flat fee.

In the scenario below, the specific tariff is set at $30/ton. Regardless of the global market price, any importer must pay a tariff of $30 for every ton of the commodity that they import. In this form, the government sets a de-facto price floor by helping domestic producers compete against foreign competitors. But once again, the importer has to pay the additional tariff.

Another indirect manner of creating a price floor is through a tariff-rate quota (TRQ) system. This intervention aims to balance support for domestic producers with consumer access to supply.

The TRQ approach creates a two-tier tariff system. Imports up to a specified quota face a low tariff rate, while volumes exceeding the quota trigger substantially higher tariffs. In the scenario below, the government sets a quota limit of 50k tons per month. Imports up to 50k tons face a 5% tariff. However, any imports over the quota limit face a 25% tariff in order to make imports uncompetitive compared to domestic production.

The quota level is calibrated to domestic production capacity. It allows enough low-cost imports to meet consumer demand that domestic producers cannot satisfy, while the higher above-quota tariff prevents market flooding that would undercut domestic producers. This creates an indirect price floor.

There are other proposals out there around broader tariffs on producer countries or creating trading blocs. I am not going to go into them here because I do not think those are likely. One main reason is that China is the dominant demand driver of these commodities and producer countries would choose partnering with them over the U.S.

The biggest “plus” for using trade mechanisms instead of a CfD scheme is that trade mechanisms do not require government spending. The onus is put on the importer instead of directly on the taxpayer. The Administration does not need to go to Congress to appropriate the money for the price floor programs. And since they already went through the 232 investigation, they would be able to enact the tariffs.

However, tariffs are inflationary. Importers are forced to pay extra to either import material or pay for higher cost domestic production. And then they will push those costs on to consumers. American manufacturers are already higher cost producers and they could be forced to pay additional costs for raw materials and key inputs. Additionally, creating price floors through trade barriers unilaterally would negatively impact domestic consumers of commodities compared to foreign competitors.

Setting expectations

The main issue here is that the Trump Administration set expectations that they were going to create price floors through CfDs and government spending. They did this through two ways:

1. The only price floor mechanism for critical minerals that the Administration created is a contract for differences scheme.

2. They messaged several times over the last 6 months that they were going to create price floor mechanisms and held up MP Materials as an example. Public comments from Administration officials are below.

• Treasury Secretary Bessent - “So we’re going to set price floors and forward buying to make sure that this doesn’t happen again, and we’re going to do it across a range of industries”

• US trade advisor Peter Navarro and National Security Council official David Copley told representatives of 10 rare earths producers – plus tech giants Apple, Microsoft and Corning, which rely on critical minerals to make their products – that the deal with MP Materials was “not a one-off” and that similar agreements were also in the works, Reuters said.

• Navarro “said that President Donald Trump's executive order to shore up supply chains will provide price floors for domestic producers of drug ingredients through long-term strategic contracts that will ensure sufficient demand.”

• The White House is “not ruling out other deals with equity stakes or price floors as we did with MP Materials, but that doesn’t mean every initiative we take would be in the shape of the MP deal,” a Trump administration official told CNBC.

This created the expectation in the market and for mining companies that CfD schemes would be used. And based on those comments, it is understandable that they felt that way. This Administration also lies on a daily basis and the President constantly changes his mind. So it is impossible to have clarity. If the Administration was always focused on using trade mechanisms instead of CfDs then they should have messaged that clearly.

Personally, I never expected that they would implement price floor mechanisms like the MP deal. They would need Congress to appropriate the money, it would be very expensive, and Trump loves tariffs. But they created the expectation that they would.

What happens next?

Based on the reaction from the Administration this week, they are moving forward on creating price floors through trade mechanisms. Price support mechanisms will be front and center in DC next week during the Critical Minerals Ministerial. Politico reports that the framework “mirrors that of critical mineral framework agreements that the administration struck with Australia and Japan last year” which aimed to support critical minerals producers through trade mechanisms.

But there are a lot of questions on how this will happen - what countries will sign up for this? How will the strike price be formulated? How will the trade mechanisms be implemented? How will these mechanisms impact domestic manufacturing? There are a host of questions that remain unanswered before we see any real mechanism be put in place.

Additional Reading

If you are interested in more details about price support mechanisms, I recommend reading SAFE’s Critical Minerals Pricing Mechanisms Issue Brief from December.

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I have new article out today for the National Bureau of Asian Research - China’s Influence in Indonesia’s Nickel Sector and Implications for the United States. NBR is doing a series focused on critical minerals and Indonesia and they were kind enough to ask me to share my thoughts. You can read some of the other great installments in the series here.

For background, Indonesia was part of my portfolio at the State Department and I was part of the conversations both in government and with the private sector about engaging Indonesia on critical minerals. I also wrote about US engagement with Indonesia in the Diplomat last summer - The IRA Has Changed. Now the US Needs a New Nickel Strategy.

Why is Indonesia important?

Quick overview - The graph below says it all. Indonesia has quickly emerged as the dominant player in the nickel industry, thanks in large part to Chinese investment following Indonesia’s export ban. They have completely changed the industry and have been dubbed the OPEC of nickel.

My Thesis

Since I wrote about the need for US to engage with Indonesia over the summer, I wanted to use this piece to show how Indonesia is a microcosm of the larger conversation on critical minerals.

The tensions between Indonesia, China, and the United States in the nickel market encapsulate the broader challenges shaping the geopolitics of critical minerals. Indonesia’s resource nationalism, China’s investment and technological lead in critical minerals processing, overcapacity, environmental issues, and the United States’ weak industrial base all converge in the Indonesian nickel sector—making it a microcosm of the global competition over strategic materials. Indonesia’s continued dominance of the global nickel industry, facilitated by Chinese investment and technological innovation, presents a complex strategic dilemma for the United States that Washington has been unable to successfully navigate to date. Ultimately, the United States faces a choice between difficult realities rather than ideal outcomes.

And then I focus on a central question of the critical minerals conversation - what does diversification actually mean? Diversification to build resiliency is the goal for Washington and Europe but we still do not have a proper definition what that means.

The goal of efforts by the United States and other Western countries to secure supply chains of critical minerals and counter China’s dominance is diversification. The idea is to diversify supply chains away from China to ensure they cannot be weaponized, as Beijing has done through recent export restrictions on rare earth elements. The example of Indonesia’s critical minerals industry raises fundamental questions regarding this strategy: Are supply chains considered “diversified” if production moves outside China, away from the influence of export restrictions? Or is diversification defined not by geography but by reduced dependence on Chinese corporate control altogether?

If diversification is only about geography, then Indonesia’s export ban is beneficial for U.S. interests. If not for the export ban, the processing taking place in Indonesia would occur in China, which is the only other country with the midstream processing ecosystem to absorb and refine large volumes of nickel ore. The ore would not flow to the United States or its allies because the United States does not have the nickel-processing capability or the pre-cathode or cathode active materials production required for EV batteries. Even the only operational nickel mine in the United States exports ore to Canada for processing.

However, if diversification is broader than geography and includes measures to minimize Chinese influence, then the United States and its allies would need to build new supply chains excluding Chinese firms.

I hope you read the whole piece but I will be back later this week/early next week to delve into the Trump Administration’s latest actions in the rare earths supply chains and the potential risks of their strategy.

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Hope you’ve had a great start to the new year and enjoyed your holiday season! My original plan for 2026 was to focus more on deep dives into key issues rather than responding to the news. However, I wanted to touch on the Administration’s comments regarding Venezuela and Greenland.

Bottom line: Critical minerals do not justify violating international law, invading another country, or attempting to revive the age of imperialism. They are certainly not a reason to attack an ally and undermine the world’s most successful military alliance. And they are an especially indefensible rationale when the resources in question are uneconomic to develop.

Venezuela

The conversation following the U.S. invasion of Venezuela has focused on its oil reserves. I recommend following my colleagues at the Center on Global Energy Policy at Columbia to understand the industry there and the impact on the global oil market.

But Commerce Secretary Lutnick mentioned critical minerals as a reason for increased involvement in Venezuela. On Air Force One, Secretary Lutnick stated “You have minerals, all the critical minerals, they have a great mining history that’s gone rusty” and his Twitter account posted “Hundreds of millions of tonnes of nickel and bauxite, thousands of tonnes of gold, with a great concentration in the Orinoco Mining Arc, one of the largest mineral and mining regions in the hemisphere.”

Venezuela has limited mining (even less legal mining) and the actual reserves are questionable. The country lacks the security, infrastructure, and legal certainty for Western mining companies to begin even looking at potential resources. Illegal mining is run by local militant groups, making it too dangerous to even study the reserves.

If Western mining companies are hesitant to enter the DRC where the resources are significant, it is highly highly highly unlikely an allied mining company will enter Venezuela any time soon.

Bottom line: Venezuela is not part of the solution to America’s critical minerals challenges.

If the Administration truly cares about strengthening relationships with South America for critical minerals purposes, they should double down on engagement and investment in Argentina, Brazil, Chile, and Peru. These countries have substantial resources, better investment environments, infrastructure, more legal certainty, and governments hungry for additional U.S. involvement in the mining sector.

Greenland

I feel bad for the Greenlanders, Danes, and Europeans as they try to rationally figure out what the Trump Administration wants with regard to Greenland. There is no rational explanation for 2026, only for 1926. Instead, it is about the New York real estate developer President wanting to control more land to meet his desire for imperial advancement and create a legacy of expanding the U.S.

Consider this: for nearly three decades President Trump has claimed that NATO countries are not paying their fair share and need to increase their defense spending. It is one consistent theme from the President.

In 2000 he wrote,

“Pulling back from Europe would save this country millions of dollars annually. The cost of stationing NATO troops in Europe is enormous, and these are clearly funds that can be put to better use.”

During the 2016 Presidential campaign he stated, “NATO is costing us a fortune, and yes, we're protecting Europe with NATO, but we're spending a lot of money."

And now when NATO countries are offering to increase defense capabilities in Greenland and the region, the President says no thank you.

(The U.S. does not even have the military capabilities to patrol Greenland and the Arctic adequately. The U.S. had to partner with Finland, the leader in icebreaking ships, to get access to icebreakers to expand their fleet in the Arctic. Will Finland want to uphold that deal if the U.S. invades a European country?)

However, critical minerals have once again been given as rationale for invading or buying Greenland so let’s take a look at the potential there.

In my opinion, the likelihood that Greenland becomes a major source of critical minerals over the next ten years is extremely unlikely and pouring substantial investment into attempting to develop the resources there would be a mistake. Invading an allied nation and destroying NATO for one rare earth mine is a terrible idea, especially when Europe wants to support the development of the project.

The main headline is that Greenland is in the top 10 globally in rare earth deposits according to the USGS. However, Greenland does not have any active rare earth mines and they are still in the feasibility stage. The Tanbreez is held up as the biggest potential project and it does have substantial heavy rare earth reserves. But the geology is difficult and it will be challenging to develop. Another potential project faces issues with radioactive byproducts. It remains to be seen if either project can be developed economically.

Beyond the difficult geology, the biggest impediments are the lack of infrastructure (roads, power, and ports that do not freeze over) and the difficult conditions (over 80% of the country is covered by the Greenland ice sheet). One does not need to be a mining engineer or a meteorologist to grasp the challenges of mining there when looking at the map below.

If you don’t believe me, listen to the experts like Bent Olsvig Jensen, the managing director of Lumina, one of two active mines in Greenland. He is one of the few actual experts on the topic.

“Foreign media describe mining in Greenland as an adventure” says Jensen. “But adventures have a happy ending. I don't see the industry in Greenland developing that way.”

“You cannot do exploration all year round; you are in the Arctic,” he explained.

He told of fierce winds grounding helicopters and knocking out communications, pack ice blocking ships and temperatures dropping to such a dreadful low — sometimes minus 40 degrees Fahrenheit — that the hydraulic fluid powering the company’s digging machines “becomes like butter.”

Or listen to the former CEO of Rio Tinto:

“We have looked at Greenland, we have been exploring it for 15 years. We have never been able to come up with a profitable project,” Rio Tinto chief executive Jakob Stausholm told CNBC in January.

“There’s clearly a lot of minerals up there, but the logistic cost in a place where you don’t have roads . . . is enormous.”

I think the U.S. would be better off financing projects in more promising jurisdictions. However, if the U.S. believes that deposits are economical enough and developing a larger presence in Greenland is important, then just co-invest with Europeans. They are interested in developing the resources and Greenland was a member of the MSP Forum. Unfortunately, that would be the rational choice but nothing about this is rational.

Beyond the geopolitics, two important things to keep in mind.

1. Most importantly, the people of Greenland do not want to be part of the United States.

2. Good luck telling the American people who consistently say affordability is the number one political issue and rising health care costs is a major issue, that spending potentially hundreds of billions of dollars on Greenland is worth it.

As discussed previously, the Administration frequently attempts to push good policies while actively undermining their overall mission. This week is unfortunately another example of it. The findings of the much-anticipated Section 232 investigation on processed critical minerals and their derivative products (PCMDPs) was released. Instead of recommending specific tariffs, the subsequent executive order tasks the Commerce Department and USTR to negotiate agreements with countries, including price floors and trade measures. This will be challenging and I will get into why in future posts. But as major consumers of these minerals, Europe will need to be part of any coordination. Good luck to the negotiating teams if they have to do so following an invasion of Greenland.

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A DoD-Backed Smelter—and a Corporate War That Could Kill It

On December 15th, the Department of Defense entered into a $7.4 billion partnership with Korea Zinc to build a smelter in Clarksville, Tennessee, with the Pentagon holding a 40% stake in the joint venture. Korea Zinc is a South Korean industrial company that is the world’s largest refined zinc producer and a global leader in smelting critical industrial and defense-relevant metals. Under the agreement, the DoD will provide a conditional investment of $1.4 billion. The Department of Commerce will contribute $210 million via funding from the Biden administration’s CHIPS and Science Act, while JPMorgan is backing the project through its new Security and Resiliency Initiative.

IF the project stays on schedule—a big “if,” for reasons explained below—construction would begin in 2026, with operations starting in 2029.

In a separate deal, Korea Zinc will acquire Nyrstar’s current smelter in Clarksville and develop the new facility there. (Nyrstar is owned by commodity trading giant, Trafigura) Why is this important? As the press release states, the site is fully permitted, removing one of the largest sources of delay for major industrial projects in the U.S.

This is exactly the type of project the United States should be prioritizing: midstream processing capacity. According to Korea Zinc, the facility will produce 300,000 metric tonnes per year of zinc, 35,000 metric tonnes of copper1, and 200,000 metric tonnes of lead. But the real strategic value lies in the byproducts: antimony (used in ammunition), gallium and germanium (critical for semiconductors) and others (total of 13 products in all).2 The other critical minerals are frequently produced as by-products of zinc smelting.

Zinc is strategically important for defense because it protects military equipment from corrosion, enables ammunition production through brass alloys, and anchors smelting systems that supply multiple defense-critical byproduct metals. In 2023, China was the leading producer of zinc concentrate and refined zinc.

There will be questions about the economics, operating costs, feedstock for the smelter, and offtake but I will leave those questions to zinc experts.

However, three things before delving into the drama.

1. The smelter shows the importance of international partnerships for critical minerals. Korea Zinc is one of the leading zinc producers and the Tennessee facility will be modeled on its flagship Onsan smelter in South Korea. That significantly reduces construction and operational risk. The U.S. simply doesn't possess the deep technical knowledge and operational experience to build this type of facility on our own, at least not quickly or efficiently. If we're serious about developing midstream processing capacity, we need to rely on partners like South Korea, Japan, Australia, and Europe who have maintained this industrial capability.

2. In the press release, Korea Zinc outlines why Tennessee is a good location for the smelter. They specifically point to electricity rates - “one of the largest smelting costs – are relatively low in the region, offering significant cost advantages in terms of processing fees.”

   Why are electricity rates lower there? The New Deal-Era Tennessee Valley Authority. It is a great example of how large government infrastructure investments can be transformational for the country, nearly 100 years after its creation.

3. Operating expenses are a key issue for critical minerals processing in the U.S. Korea Zinc highlights the facility will be eligible for IRA’s 45X production tax credit (10% credit). However, thanks to changes made by the OBBB, the credit expires for critical minerals at the end of 2033. Even if the facility becomes operational in 2029, that provides only four years of tax credits—hardly the long-term incentive needed to justify a multi-billion dollar smelting investment.

On to the drama

It sounds like the tagline for an upcoming HBO show or the next great Korean drama – The descendants of the founders of a key industrial company fight for boardroom control using every legal mechanism possible. A foreign superpower enters the dispute over fears of their greatest geopolitical competitor gaining the upper hand. (Re-read with the Succession theme song on in the background).

It is the backstory of the new smelter. And it threatens the future of the smelter.

The NY Times ran a great rundown of the drama last January in the lead up to a shareholder vote. I recommend reading it but here are the major plot points;

• Korea Zinc was founded over 50 years ago by two North Korean refugees, Choi Ki-ho and Chang Byung-hee, who had previously established Young Poong together in the 1940’s. The company has grown into the world's largest refined zinc producer and one of South Korea's prominent chaebols, with global operations spanning non-ferrous metal smelting and critical minerals production.

  • Chaebols are large, family-controlled South Korean conglomerates. Other examples are Samsung, Hyundai, SK, and LG.

• Yun B. Choi, the current Chairman and Columbia law grad, is the grandson of the founder while Young Poong is controlled by the Chang family.

• In 2024, the Chang family, through Young Poong, partnered with MBK Partners, a private equity firm focused on North Asia, to launch a takeover bid of Korea Zinc.

  • MBK was founded by Michael B. Kim, a Harvard educated Korean billionaire who also authored a novel. He is also facing allegations of tax evasion . (He denies wrongdoing)

• MBK and the Chang family stated the takeover bid was about governance issues and stakeholder value. They specifically criticize the Chairman’s leadership.

• Korea Zinc leadership called the bid a hostile takeover and MBK Partners a “predatory corporate raider.”

• Over the last year, MBK built a combined stake large enough to challenge incumbent management, prompting Korea Zinc to buy back shares (a value of $1.5 billion) and defend control through board elections. At a special shareholder meeting in January 2025, Korea Zinc’s management successfully retained board control by excluding certain rival votes and limiting board size, drawing condemnation and additional legal action from MBK and Young Poong.

How a Korean family feud reached Washington

Korea Zinc’s leadership has attempted to leverage the U.S.’s worry about China’s control of critical minerals to support their control of the company. In their view, Korea Zinc’s key technology or the company itself could be sold to China…and when both parties are already worried about Chinese control, that is terrifying news for Washington.

Their claim is MBK Partner’s connection China through investment and a state funded LP would see Korea Zinc’s technology being sold to China. This would damage Western critical minerals supply chains and further the concentration of the supply chains.

I had a front row seat to all of this when I was at the State Department. Since South Korean critical mineral issues was a part of my portfolio, I worked with the much smarter folks on the Korea Desk to understand the issue and respond to the flow of letters and requests coming into State about the issue. The proxy fight became an issue on our radar in early fall of 2024 but escalated with a series of letters from Congress about Korea Zinc.

Democratic Congressman Eric Swalwell, Co-Chair of the Critical Materials Caucus, sent a letter to the State Department in December 2024 to express concerns. Swalwell said the issue was a matter of economic and national security, going on to say;

It is with this backdrop that I bring to your awareness the prospect of MBK Partners taking a controlling interest in Korea Zinc. Given the focus and investment track record of MBK Partners, it is possible that PRC-based or PRC-financed entities may be welcomed into a variety of transactions. This could result in technology transfer to PRC entities as well as the dismantling of an important global player in the joint United States-Korea effort to insulate and expand critical minerals.

PRC=People’s Republic of China

The letter appeared on a Korea Zinc website shortly after its public release.

The letter was followed up by a letter from Republican Rep. Zach Nunn and a series of notes from Congressional staff asking for additional information.

How did Korea Zinc get Congress to care about this issue?

In 2024, they paid Mercury Public Affairs, a lobbying firm in D.C., $ 1 million for lobbying on their behalf. Mercury leadership includes Cheri Bustos, former Democratic Congresswoman, and David Vitter, former Republican Senator. They re-upped with Mercury in 2025 to tune of $500,000, making it one of the ten largest single lobbying deals in Q1 2025.

And perhaps most consequently when it comes to the smelter, they hired Ballard Partners in 2025.

Politico called the founder of Ballard Partners “The Most Powerful Lobbyist in Trump’s Washington” during Trump 1 and the lobbying firm has been called “The Lobbyist King of the Trump Era.” Former employees include White House Chief of Staff Susie Wiles and Attorney General Pam Bondi. The firm is reportedly now the highest-paid lobbying firm in DC. They represent both Netflix AND Paramount – the two sides bidding for Warner Brothers.

In my personal opinion…

the current leadership at Korea Zinc used Washington’s fear of Chinese control over critical minerals as a way to back their side in the takeover dispute. It was a good lobbying effort. But I did not think their argument was backed by the facts nor should the U.S. be involved.

1. MBK’s connection to China is being overstated. As a North Asia–focused private equity firm, some China exposure is inherent to its mandate. Reportedly China Investment Corporation, a Chinese sovereign wealth fund is an LP for MBK. But available reporting suggests the exposure is small—on the order of less than 5% of fund capital—and non-controlling, with no public evidence that it influences governance, strategy, or technology transfer decisions.

2. South Korea understands the importance of critical minerals diversification and would not allow key technology be sold to China. South Korea is the Chair of the Minerals Security Partnership and invests globally to support Korean companies diversify supply chains. But most importantly, South Korea’s Ministry of Trade, Industry and Energy labeled Korea Zinc’s precursor technology a national core technology. This means a foreign company would be prevented from acquiring the technology without government approval.

3. In the end, this is two chaebol families fighting for control and I did not think the U.S. should get involved in the internal machinations of a Korean company.

Drama Threatens the Smelter’s Future

Encouraging Congress to write letters is one thing. Building strategic partnerships with defense contractors is another. But partnering with the U.S. government to build a $7.4 billion smelter as a way to cement control? That's a major escalation.

In many ways it is great business - Korea Zinc is the latest in a series of companies that see how the Trump Administration and the U.S. overall are desperate to diversify critical minerals supply chains.

But it could also put the project in major jeopardy.

As Bloomberg reports, Young Poong and MBK Partners filed an injunction in South Korea to block a share issuance needed to fund the smelter. They are not against the idea of the project but against how it will be funded. Through the share issuance, the US supported JV would gain 10% of Korea Zinc shares. Below is what this means according to the ChoSun Daily in South Korea

Once the rights issue concludes, the total number of issued shares will increase, diluting Young Poong’s stake from 44% to 40% and Chairman Choi’s current stake (including allies) from 32% to 29% at the March shareholders’ meeting next year. However, with the JV’s 10% stake added, Chairman Choi’s side will ultimately rise to 39%.

What happens in the next episode of this now global drama is anyone’s guess. A court decision on the injunction is expected soon.

If the court rules in favor of MBK, the DoD and Korea Zinc will have to find a new way to finance the project and it will put the facility in jeopardy. At the very least, the timeline will be moved back.

If the Korea Zinc leadership wins, the conversation will change from if the smelter will be built to operating expenses. But it could be a major project for the U.S. and an example of partnering with foreign companies to strengthen economic and national security.

Bloomberg reports the Administration was aware of the disputes-

The Trump administration is aware of the proxy fight and potential lawsuits, but isn’t intending to get involved, the US officials said. One official downplayed the dispute as a potential routine corporate dispute. The US doesn’t presuppose the motives, another added.

I hope the Administration listened to our Embassy in Seoul and the Korea Desk in the lead up to the deal. Choosing to look at this positively, it could be seen as the Administration taking advantage of Korea Zinc’s internal disputes to score a major domestic investment.

But if they chose to not listen to the experts and instead listened to the lobbyists, they could be in the middle of protracted dispute.

Have a wonderful Holiday Season! I hope you can have a restful of the end of the year with family and friends. This will be my last post of the year but thank you for reading Charged States. I plan on writing regularly in the new year.

We have a lot to look forward to in 2026 - the Midterm Elections, World Cup, a new Toy Story movie and most importantly Jayson Tatum returning to the Celtics, another playoff push by the New England Patriots and a title challenge from Arsenal.

Wishing you health and happiness in the new year!

Kevin

The House of Representatives approved the Fiscal Year 2026 NDAA last night and the bill now goes to the Senate for approval. The $900.6 billion authorization bill passed by a 312-112 vote. The NDAA includes several sections related to critical minerals, battery components, and energy technologies. Below is a rundown of what is in the NDAA pertaining to these topics and the key takeaways so you do not have to read all 3,000-plus pages.

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What is the NDAA?

The National Defense Authorization Act (NDAA) is the annual legislation that authorizes funding levels, policies, and organizational changes for the U.S. Department of Defense (DoD).1

Below is an overview from the Congressional Research Service:

The NDAA establishes or continues defense programs, policies, projects, or activities at the Department of Defense and other federal agencies, and provides guidance on how the appropriated funds are to be used in carrying out those authorized activities.

Overall, it sets strategic priorities for the military, governs everything from personnel and procurement to emerging technologies and industrial base security, and serves as Congress’s primary tool for shaping defense policy. The NDAA touches everything the military does - from healthcare to training to organization to munitions to critical minerals. You name it, it is in the bill. And because it is considered “must-pass” legislation, the NDAA often becomes the vehicle for major bipartisan policy initiatives. This year Congress also reauthorized the DFC through the NDAA rather than through a standalone bill.

The bill should be approved by the Senate and signed into law by the President by the end of the year.

Key Sections of the NDAA Related to Critical Minerals or Energy Technologies

SEC. 842 — Prohibition on Acquisition of Advanced Batteries from Certain Foreign Sources.

Section 842 requires the DoD to phase out all advanced batteries containing Chinese or other “foreign entity of concern” materials, components, or technology. New acquisition programs must comply by 2028 and all existing systems must comply by 2031, with only narrow exceptions. This is effectively a mandate to build a fully non-Chinese battery supply chain for U.S. defense applications.

The restrictions are for both purchased batteries, and batteries “embedded within warfighting and support systems.” And the restrictions are extensive - they cover cathode materials, anode materials, separators, anode foils, solvents, additives, electrolyte salts, and internal safety devices. We are not just talking about the cell or battery pack.

The battery can include limited Chinese material only if the battery was assembled in a non-FEOC country2, “95 percent of the costs” comes from non-FEOC sources, and it is produced without technology licensed from a FEOC.

SEC. 844 — Prohibition on Procurement of Molybdenum, Gallium, or Germanium From Non-Allied Foreign Nations and Authorization for Production From Recovered Material.

This expands the DoD’s ban on procuring materials from non-allied foreign nations by adding molybdenum, gallium, and germanium to the prohibited list. All three critical minerals have faced Chinese export restrictions, and their production is dominated by China. Gallium and germanium have faced severe restrictions, but they are vital for semiconductors and advanced defense applications.

The section also states these materials can now be sourced from recycled inputs if the original source was non-adversarial and all reprocessing occurs in the U.S. or allied countries.

The prohibition for gallium and germanium will phase in over two years. For gallium, this timing should line up with scheduled production from the Alcoa-Sojitz facility in Australia the DoD is supporting with Japan and Australia. The procurement regulation is a good way to backstop the project by ensuring offtake for the project.

SEC. 847 — Prohibiting the Purchase of Photovoltaic Modules or Inverters From Foreign Entities of Concern.

Section 847 prohibits DoD from purchasing solar cells, modules, or inverters made by Chinese and other “foreign entities of concern” using FY2026 funds. The prohibition only relates to direct DoD procurement.

Chinese companies dominate the entire solar supply chain but FEOC-made inverters have been repeatedly flagged by DOE, DHS, and FERC analysts as potential cyber risks. Solar inverters contain communication modules, firmware, and grid-interface systems but 9 out of 10 largest global PV inverter companies are Chinese.

SEC. 848 — Clarification of Procurement Prohibition Related to Acquisition of Materials Mined, Refined, and Separated in Certain Countries

Section 848 clarifies and strengthens an existing prohibition by making it explicit that DoD cannot procure any covered critical material if it was mined, refined, or separated in a “covered nation” like China or Russia. This closes loopholes and ensures DoD avoids adversarial supply chains at all stages of material production.

DFC Modernization and Reauthorization Act of 2025

One of the biggest wins of the NDAA is the reauthorization of the International Development Finance Corporation (DFC). DFC’s authorization expired in October, but the NDAA reauthorizes the development finance institution until December 31, 2031.

Key provisions in the reauthorization that are important for critical minerals and the DFC broadly.

• DFC’s maximum contingent liability (DFC’s credit card limit) has increased from $60 billion to $205 billion.

• The bill establishes a new $5 billion Equity Investment Account to increase the use of equity investments in key projects, and it raises the allowable equity share per project from 30% to 40%.

• The DFC remains focused on developing countries; however they can now support projects in “wealthy countries” if the project pertains to “energy”, “critical minerals and rare earths” or “information and communications technology, including undersea cables.”

  • However, DFC support must be less than 25% of project’s total cost and all high-income projects together must be less than 10% of DFC’s total exposure.

• Congress specifically states that critical minerals supply chains should be a top priority for the DFC over the next few years.

One other interesting note - there were reports earlier this year the Trump Administration was looking to use the DFC to support domestic projects. Congress expresses its view on this matter in the reauthorization. It is the “Sense of Congress” that DFC funding “should not be diverted for domestic or other activities.”

Main Takeaways

• When discussing defense demand for batteries or critical minerals, the common refrain has been that defense-related demand is not big enough to drive markets or make projects economical. This remains true. However, the argument has often served as a justification for inaction. This will not solve our broader issues but the US and allies need every tool and demand driver possible to build new supply chains. The NDAA increases the power of the limited demand into a catalytic force by embedding clear, legally binding demand signals into procurement policy.

• We should expect to see price bifurcation. Companies that can demonstrate a full non-Chinese supply chain will be able to charge more for their products and the defense market will be willing to pay for it.

• Congress can create these rules because the defense sector does not have the same financial constraints as the commercial sector. The DoD budget is practically unlimited in the U.S. If there is a national security risk from Chinese-dominated supply chains through either trade restrictions (critical minerals) or cyberattack (inverters) then Congress will authorize the money. And we learned over the last year the cost of inaction can be more expensive than the cost of action. (I’m being hyperbolic and Pentagon folks will disagree but coming from the State Dept which had no budget…The size of the NDAA was $8 billion larger than what the DoD asked for.)

  The commercial sector cannot operate this way. Companies must maintain strong margins to support operations, satisfy shareholders, and remain competitive.

• Congress and the Administration should look to see how they can institutionalize these requirements at the international partner level. We are in the midst of a military buildup, how can the U.S., Europe, and Pacific allies take advantage of it to build new supply chains? While DoD demand will not build a battery factory, joint NATO or NATO-IPP procurement rules could build stronger demand. (Understanding the challenges the Administration is creating for our international partnerships)

• Despite the importance of the new rules, the reauthorization of the DFC is the most important critical minerals related part of the NDAA. The higher liability limit, increased equity participation, and ability to fund minerals projects in more countries is vital for global engagement and building new supply chains. The higher liability cap is especially important given the capital-intensive nature of mining projects.

The less rosy view

• If robust commercial demand already existed, Congress would not need to mandate these requirements, nor would the DoD be forced to scramble to stand up a non-Chinese supply chain. If the United States had a strong battery and EV supply chain (AND did not eliminate the policies helping to build one) the DoD would be able to piggyback off the commercial demand. The DoD can support the development of part of the supply chain, but the USG will be forced to procure the technology at a premium.

  The Trump Administration is using the Pentagon to drive demand across the industrial base, but it would be more efficient, the economy would do better overall, and we would be more globally competitive, if we had a growing commercial sector for these technologies. We are once again trying to catch up for our own policy mistakes.

The big question - When it comes to the battery rules, is this even possible?

• Right now, meeting the battery requirements is likely not possible. I do not believe any producer would be able to meet the requirement that 95 percent of a battery’s total costs originate from non-FEOC sources. Will it happen by 2028, when the first requirements kick in? I don’t know. The NDAA does allow for a waiver process if the requirements cannot be met. It will be very interesting to see if a waiver is needed come 2028.

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Happy Monday! Hope it was a nice weekend.

I have new opinion article out on Foreign Policy entitled “American Automakers Need Chinese Batteries” (you can read it for free by the following link). I have been wanting to express this argument for a while, so I hope you will read it.

Below I quickly breakdown a few things because based on my conversations, if you are not in the weeds on this topic, you may be surprised by some of the points.

Quick background

Ford and General Motors (two quintessential American companies) picked CATL, the Chinese battery giant, to partner/supply them with batteries for their affordable electric vehicles. CATL is the leader in lithium-iron phosphate batteries, which is the more affordable version of lithium-ion batteries. (At a very basic level, in the majority of cases automakers will build their vehicles and a separate battery company will supply them with the battery for electric vehicles.)

The logic is clear - Ford and GM want to make more affordable EVs so they picked the company that makes the best batteries.

But that logic does not fly in DC. Michigan Republican Rep. John Moolenaar said GM’s decision was “disappointing … to the American people.” The Washington consensus (across both parties) is that American companies should not work with Chinese companies, and policymakers continue to make it harder to do so.

My main thesis

But Ford and GM’s moves underscore a blunt reality: If America’s automakers want to compete against Chinese automakers in the global market, they may need to partner with Chinese battery supply chain companies. The American auto industry is facing an existential threat from Chinese automakers. And the future of the industry depends on securing the best batteries, wherever they come from.

Chinese automakers, really?

For most Americans not following the conversation, the initial response is Chinese automakers are a threat to American automakers?

The answer is 100% yes. But the confusion makes sense. As I write in the article;

The vehicles are not on American roads and won’t be in their neighborhood any time soon. Tariffs, safety regulations, and upcoming connected vehicle restrictions make it prohibitive for American consumers to even see Chinese cars on their street. They must rely on YouTube videos or travel abroad to grasp the threat from Chinese automakers.

China is the leader in electric vehicles and it is not even close. As shown in the chart below, 6 of the 10 leading EV makers are Chinese.

There is an out-dated view on Chinese manufacturing in the US - they can’t innovate or they produce either cheap or poor quality products. I promise that is no longer the case and especially with electric vehicles.

Ford CEO Jim Farley called Chinese vehicles an “existential threat” to Ford. My view is that an existential threat to Ford and the industry, is an existential threat to American manufacturing and communities across the country.

I am writing this from London, where BYD, XPENG, and other Chinese vehicles are on the road. And in Mayfair, the historical home of automaker showrooms in the city, BYD has a showroom on the same street as Rolls-Royce, Land Rover, Bentley, and Ferrari.

Leaders in batteries

At the same time (and thanks to the demand for EVs in China) Chinese battery producers are also the global leaders. 6 of the 10 leading battery producers are Chinese, along with 3 Korean companies (LG, Samsung, & SK) and one Japanese company (Panasonic).

CATL is the global leader, partnering with everyone from Tesla in China to Ford to Mercedes-Benz, BMW, Volkswagen, and Toyota.

Why I think America should welcome Chinese battery makers into the US.

I understand why politicians and policymakers want to limit Chinese companies from entering or profiting from the US, especially for cutting edge technologies.

But when it comes to batteries and EVs, I think de-coupling from China does more damage to the US than China.

Washington must recognize that an uncompromising anti-China stance in the battery supply chain will only guarantee Chinese automakers’ dominance in the global market. To use the parlance of the last few years, we need to “de-couple” Chinese battery companies from the conversation about critical minerals or automakers.

If we remain on the current trajectory, we are headed for a bifurcated automotive market: a global market, dominated by Chinese brands along with Tesla and the most competitive European and Asian brands; and a U.S. market, cut off, relying on tariffs and protection, and falling further behind. That means less production, fewer jobs, and weaker American competitiveness.

Read the full piece here - American Automakers Need Chinese Batteries

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The U.S. Geological Survey (USGS) released the 2025 Critical Minerals List last week, adding several new commodities. Below is a breakdown of what the list is, what was added, and a reflection on the adage: if every day was Christmas, would Christmas still feel special? (Or in this case—critical?)

What is the Critical Minerals List?

The U.S. Geological Survey (USGS) Critical Minerals List identifies mineral commodities vital for economic and natural security AND vulnerable to potential supply disruptions. The Energy Act of 2020 specifically outlines three criteria:

1. The commodity must be “essential to the economic or national security of the United States.”

2. They must “serve an essential function in the manufacturing of a product… the absence of which would have significant consequences for the economic or national security of the United States”

3. And their supply chain must be “vulnerable to disruption (including restrictions associated with foreign political risk, abrupt demand growth, military conflict, violent unrest, anti-competitive or protectionist behaviors, and other risks through-out the supply chain)”.

By law, the USGS releases a new list every three years, following a methodology that weighs each mineral’s economic importance and supply vulnerability. The 2025 list now includes 60 minerals, up from 35 on the original 2018 list.

The USGS list serves as the primary reference for the U.S. government, though other agencies maintain their own. The Department of Energy (DOE) has a separate Critical Materials List, and the Department of Defense’s Defense Logistics Agency (DLA) maintains a Critical and Strategic Materials List used for stockpiling.

Additionally, other countries and governments have their own critical minerals list depending on their import dependence or natural resources. For example, the European Union’s Critical Raw Materials list includes commodities not on the US list like coking coal, strontium, feldspar & helium. Lists in Canada and Australia are focused on minerals they produce due to their substantial natural resources.

There are major similarities but it is good to remember that when people say “critical minerals” it can differ depending on who is talking.

What was added to the list?

This year the USGS added 10 new commodities to the critical minerals list -

• Boron: Strengthens glass, ceramics, and industrial alloys.

• Copper: Powers wiring, electronics, and renewable infrastructure.

• Lead: Enables batteries, shielding, and industrial alloys.

• Metallurgical coal: Fuels steelmaking through coke production.

• Phosphate: Provides essential nutrients for global agriculture.

• Potash: Supplies potassium fertilizer for crop growth.

• Rhenium: Strengthens jet engines and refinery catalysts.

• Silicon: Forms semiconductors, solar panels, and alloys.

• Silver: Conducts electricity in solar and electronics.

• Uranium: Powers nuclear reactors for clean energy.

The Department of Defense recommended the inclusion of arsenic and tellurium while the DOE recommended adding metallurgical coal and uranium (which was telegraphed by a previous Executive Order).

What does it mean for a mineral to be added to the CM list?

Inclusion on the list signals which minerals are essential to national security and economic stability, drawing policy attention and public investment. Projects involving listed minerals become eligible for federal loans, grants, and risk-sharing programs from agencies such as DOE, DOD, EXIM, and DFC. Inclusion also prioritizes projects for permitting support (like FAST-41 accelerated permitting) and research funding.

The biggest immediate impact is related to tariffs - the USGS list dictates what minerals are included in the upcoming Section 232 investigation into processed critical minerals and derivative products. This means there could be tariffs or trade restrictions on the minerals included on the list.

But beyond government programs, the critical minerals list is a signaling exercise. Inclusion on the list enhances investor confidence and interest, allowing mining companies to attract additional capital for projects.

What does it not mean?

The most important thing to note is that being added to the critical minerals does not mean the mineral is automatically eligible for the 45X tax credit. 45X is the Advanced Manufacturing Production Credit of the Biden Administration’s Inflation Reduction Act (IRA) which offered a tax credit for each unit of production of several clean energy related components, including 10% for critical minerals.

However, the IRA, using the 2022 critical minerals list, specifically dictates what minerals and their level of purity are eligible for the tax credit.

For example, under the IRA:

The term lithium means lithium that is—

(i) Converted to lithium carbonate or lithium hydroxide; or

(ii) Purified to a minimum purity of 99.9 percent lithium by mass.

Federal Register - Section 45X Advanced Manufacturing Production Credit

Congress would need to amend the statute to add newly listed minerals before they could receive the 10% tax credit.

There has been a strong push by the copper industry for copper to be included on the USGS list and become eligible for the 45X credit, including during last summer’s negotiations over the Trump Administration’s OBBB. However, the idea was not included in the final text - the bill had to be budget neutral to pass Senate reconciliation rules and the inclusion of a new commodity would have required the tax credit’s cost to be offset by spending elsewhere. Metallurgical coal was the only commodity specifically added. (It should be noted its inclusion was pushed by Senator Justice (R-WV) and his family owns a metallurgical coal company along with the fact a large portion of the metallurgical coal produced in the US is exported to China to produce steel)

Given the financial strain on global copper smelters, Congress should consider adding copper to the 45X list to make it eligible for the production tax credit.

If every day was Christmas…

…then Christmas wouldn’t be that special.

We may be approaching this point with critical minerals. As a recent SAFE graphic illustrates, our definition of “critical” is losing meaning.

It’s becoming increasingly difficult to determine which supply chains deserve priority as the list of “critical” minerals keeps expanding. The US Government needs better prioritization on what minerals to actually tackle, especially when resources are limited. This is not the fault of the USGS. They are following their mandate and are apolitical experts who knew everything about gallium before it was in the headlines. For niche metals, they go searching through random industry periodicals to find data.

The USGS attempted to prioritize key minerals in their latest methodology report by outlining which minerals are considered high risk based on their impact on the economy and potential for supply disruption. It should not be surprising several face export restrictions from China (bolded below).

“High Risk” Minerals

• Dysprosium

• Gadolinium

• Gallium

• Germanium

• Lutetium

• Magnesium

• Niobium

• Potash

• Rhodium

• Samarium

• Terbium

• Tungsten

• Yttrium

But at the same time, being import dependent on China is different than being import dependent on Canada (potash) or Brazil (niobium)…at least in normal times.

As I have argued before, the US cannot and will not create a separate supply chain for each of the now 60 minerals on the critical minerals list. The US Government needs to prioritize what minerals are the most important based on immediate supply chain disruptions (Chinese actions), impact on the economy, and future growth sectors. The most immediate threat remains minerals facing Chinese export restrictions.

Finally, critical minerals go through transformation across the supply chain - from the mine to the final product. But the USGS list does not always calculate the criticality at different stages of the supply chain. This is vital to determine what policies are necessary or where the USG should invest their resources.

Idea for a commodity data firm - Produce a critical-minerals breakdown which pinpoints supply-chain chokepoints by each stage, quantifies disruption risk, and estimates the capital required to relieve each bottleneck. Such a framework would finally show where the real vulnerabilities lie—and what it would cost to fix them.

Additional Reading

If you are interested on the USGS’s methodology for selecting the critical minerals you can read their full methodology report

• Methodology and Technical Input for the 2025 U.S. List of Critical Minerals—Assessing the Potential Effects of Mineral Commodity Supply Chain Disruptions on the U.S. Economy

But if this sounds boring you can read SAFE’s great outline of it - I Read The U.S. Geological Survey’s Critical Minerals Methodology So You Don’t Have To

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President Trump and Xi Jinping agreed to an economic truce in South Korea, under which China will delay implementation of its latest rare earth element export restrictions for one year.

I’ve held off writing about these new rare earth element (REEs) controls because this outcome, a temporary delay on the most advanced restrictions, always seemed the most likely. But the US still faces a dire situation. Below are my thoughts on the REE challenge and what happens next. Bottom line: the pause buys time, not relief.

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Delay on the most advanced REE restrictions, but licensing requirements remain

China agreed to delay the most advanced rare earth elements related restrictions, announced on October 9th, for one year. Those restrictions were the equivalent of the US’s Foreign Direct Product Rule, a policy extending far beyond its borders (extraterritorial), requiring government approval for any export of REEs or magnets containing even small amounts of material made with Chinese technology — no matter where the final product is manufactured. The US has a similar policy for semiconductors.

However, the export licensing restrictions announced in April remain in effect. Export license approvals are still required for the export of heavy rare earths - scandium, samarium, gadolinium, lutetium, yttrium, dysprosium, terbium and NdFeB magnets (since they include dysprosium and terbium). This allows Beijing to influence the full supply chain and track where material is going.

The October restrictions are the most draconian, but the April restrictions have already had a profound impact and allow China to control the supply chain. The April restrictions were strong enough to force Ford to shut down factories due to limited supply. While the reprieve on the most extreme restrictions is positive, the industrial base is still in a dire situation.

We should not expect the Defense industry to get licensing approvals

At a minimum, US defense related companies should be under the assumption they will not receive REE licensing approvals going forward. The April restrictions were specifically targeted at dual-use applications (meaning they have both defense or civilian/consumer applications).

If restrictions on other critical minerals like gallium are evidence of how China will proceed (a good hypothesis), anyone applying for export licenses will be required to list the end user of the REE or magnets, and defense related end users will be restricted.

But consumer applications could be caught up the process. Prior to these restrictions, China had a history of delaying exports to certain countries on spurious claims after diplomatic disputes. Now they have a full licensing system to delay or restrict exports.

How does this impact diversification?

US and allies need to be full speed ahead on supply diversification. The is a temporary reprieve but this should not change the approach going forward at all. The proverbial gun is still pointed at the US. If anything, this demonstrates to China the power they have.

However, it will be interesting to watch trade flows over the next year. Will companies race to stockpile material? Does China let material flow to certain countries, while limiting exports to others?

Quick refresher - Why is this important?

• What are rare earths elements? A group of 17 elements, including neodymium, dysprosium, and terbium, that are difficult to separate and refine economically. They are usually categorized as light rare earths (LREEs) and heavy rare earths (HREEs).

  • Since it is often confused - just like how every square is a rectangle but not every rectangle is a square, rare earth elements are critical minerals but not all critical minerals are rare earths.

• Why are they important? Rare earths are critical for clean-energy technologies (EV motors, wind turbines), defense systems (missiles, radar), and advanced electronics- making them essential to both the energy transition and national security.

• What does China’s control look like? China dominates every stage, from mining and separation to magnet manufacturing, accounting for roughly 60–70% of global production and over 90% of refining and magnet output, giving it powerful leverage over global industries.

• What does the supply chain look like? Mining and concentrating ore —> chemical separation and refining of individual elements —> metal-making and alloying —> manufacturing of high-performance magnets and components.

China was (is) always going to implement these restrictions

The timing of both the April and October restrictions (following “Liberation Day” tariffs or new US restrictions) signaled that China was implementing the restrictions in retaliation or for negotiating tactics. But regardless of trade negotiations, China was going to implement advanced restrictions on REEs and related technologies at some point. It was a matter of when, not if.

China has worked domestically over the last two decades to build up the domestic rare earth supply chain and then concentrated it under two state-owned entities, China Rare Earth Group and China Northern Rare Earth Group. You name the industrial policy, they have used it - export quotas and bans, preferential tax treatment, lax environmental regulation, and subsidies. There have also been reports of China preventing their citizens working overseas from sharing expertise. All while being the lead demand center for the applications.

This now means they are not going to get rid of these restrictions. The past twenty years of economic statecraft in the US shows once you find out that you can have a tool to use (sanction, export restrictions, etc), a country is more likely to strengthen its tools and increase its usage.

This is going to be difficult

Japan is held up as the gold standard of REE supply chain diversification and understandably so.

Japan began their push for diversification in 2010, following China’s export ban following an incident over a disputed island. They were 90% dependent on China for rare earths in 2010. Fifteen years later, they are 70% dependent on China for rare earths supply. And this is with leading non-Chinese supply chain companies and strong public-private partnerships.

Building out a non-Chinese supply chain will be very hard and it will take time. There will be issues and challenges at each stage of the supply chain. This a 5-10 year challenge, at an absolute minimum.

(I think 10-15 years, if ever, is the most likely timeline. There are a host of reasons of why but the biggest one is that at some point the attention will turn elsewhere, to another policy issue, and things and financing will slow down.)

It is understandable for outside viewers to look at this and wonder why could it be so hard? If China can do it, why can’t we? The reality is that the United States, just like we did for other industries, offshored much of its rare earth processing and magnet manufacturing, gradually losing both industrial capacity and technical expertise, while China systematically developed a fully integrated supply chain from mine to magnet.

We cannot flip a switch and build this industry overnight and we cannot bet on just one company to build the full supply chain. There are a host of challenges that will arise, below are just a few examples -

At the mining level

• Money can’t buy me love or geological deposits - Heavy rare earth deposits are primarily located in China and Myanmar (where they are controlled by Chinese entities). The Mountain Pass deposit and most Australian deposits are focused on light rare earths. The US will need to work with Brazil, some Australian deposits, and potentially Vietnam in the future to source HREEs. But this is not an issue money will magically solve.

• Rare earth deposits are often found with radioactive material, thorium and uranium. Domestically this makes the permitting process more difficult and projects require additional capital.

• If the US imports materials, they may need to invest in processes abroad to ensure the radioactive material is handled properly.

At the separation level

• Rare earth elements are not found individually, instead a REE deposit will consist of several REEs. The elements must be separated from each other before they can processed. Currently, almost all commercial scale heavy rare earths separation and the required technology is in China. Lynas, the leading REE company outside of China, only began HREE separation this summer —> So even if you have a mine operating, who is going to separate the material?

At magnet production

Critical minerals consultancy Adamas Intelligence says that on paper, a wave of US magnet facilities underway could bring capacity high enough to offset imports by 2028. That requires everything to go to plan and operate at full tilt, and it won’t be a lasting fix as demand overtakes supply growth. - Bloomberg

• Most likely, everything will not go to plan. And this is also requires access to preceding supply chain.

We cannot innovate our way out of this

A constant refrain from Washington on all things critical minerals, and especially rare earths, is that we can innovate our way out of this. That will not happen.

Innovation may help speed up the process or lessen total demand by creating stronger REE-free magnets that can be used for less advanced technologies. And funding should go into innovation but innovation won’t solve our issues.

Three basic reasons why I think that is that case

1. When it comes to defense applications, I do not think they are willing to take the risk on less capable technologies.

2. Even if we did create new technologies, the US has a poor track record of commercialization.

3. If Japan has not innovated their way out of this issue, we are not going do it now.

Test of state capacity

China’s push to limit rare earth restrictions and the US response relies on private industry and state capacity. At the State Department in April, I warned folks that a reason for potential delays in export licenses was that China needed to build up the administrative capacity to quickly go through licensing requests. Reuters had a good report in June that the office handling requests was originally 30 people and only doubled to 60 after the April restrictions were implemented. China will need to build up additional state capacity if they intend to implement the advanced restrictions at the end of the truce next year.

But the question is equally important for the US. Does the United States have the expertise and capacity in government to implement successful policies to help build a full ex-China mine to magnet supply chain? This includes implementing the right policy mechanisms, supporting the right companies based on project fundamentals, willingness to take risks, knowing who to listen to, forming coalitions, AND building a strategy that can last past this Administration (because our issues will continue past this Administration).

The government shutdown and decimation of the civil service over the last year has made this job more difficult.

Companies caught in the middle will side with China

One key question people have asked in regard to the REE export restrictions (especially the more advanced restrictions) is how will China be able to implement the restrictions? Meaning how will China be able to restrict every company using their technology from exporting material to undesirable companies. The answer is they don’t have to. Private companies will do it for them.

Let’s look at an analogous situation to find out why - US financial sanctions on Iranian oil.

• Back in the late 2000s/early 2010s, the U.S. instituted a series of financial sanctions on Iran and their oil production to force Iran to the negotiating table to get them to stop developing a nuclear weapon.

• The US gave every company an ultimatum- either you can have access to the US dollar or you can have access to Iranian oil, but you can’t have both. Not surprisingly, mostly everyone picked the dollar.

• The US DOJ did not have to go around to every company to ensure they were following sanctions. Instead, they went after a few big fishes - Credit Suisse and BNP Paribas with massive fines. Then everyone knew the consequences of trying to evade US sanctions.

The same would be true for the most draconian Chinese export restrictions. Yes, export restrictions are harder to implement than financial sanctions (and export restrictions on Russia has shown that to be true). But for most companies in the REE supply chain (whether it is magnet makers or automakers), access to Chinese feedstock, technology, and their market is more important than the US market. The companies are not going to risk evading the restrictions if it means that they cannot export material or be preventing from selling into the Chinese market. They might have to catch one or two, like the DOJ did, but the constant threat of blacklisting will mean they do not have to catch everyone.

(If you want understand this and the world we live in right now, read NY Times Best-seller Chokepoints by Eddie Fishman)

One time where Operation Warp Speed makes sense..

Following the overwhelming (but not talked about enough) success of Operation Warp Speed (OWS) to quickly develop and commercialize COVID vaccines during the pandemic, everyone has called for an Operation Warp Speed for you fill in the blank issue. However, this is a situation where this makes sense and the smart folks at Employ America beat me to it.

I recommend reading their proposal but I would add two more things on why an Operation Warp Speed or government coordinated approach is necessary.

1. Whole-of-government approach for coordination - As an Institute for Progress report on OWS states, there needs to be coordination across the government to overcome hurdles like permitting or in the case of REEs, who is funding what? Based on my time in government, there was a lack of communication between the different agencies with funding (DOE, DoD, EXIM, DFC, Commerce, etc) about what projects were going to be funded or at least what agency should focus on what minerals/parts of the supply chain. I hope things have improved since I left, but I doubt it. Coordination on funding would ensure agencies do not invest in redundant projects and capital is allocated effectively.

2. Utilizing the National Labs for testing and validation - The Department of Energy has an incredible series of Laboratories across the country but aspiring critical mineral supply chains companies frequently complain that labs need to do better job working with the private sector to validate material or technology. Increased coordination with the labs would allow companies to validate their materials in order to move forward with private sector partners.

Beware the “PowerPoint” companies

A former State Department colleague coined the term PowerPoint companies - mining companies that show up in DC or a conference with a detailed (and pretty) PowerPoint made by consultant showing how their deposit is going to solve all of the US’s REE issues if only the US Government gave them funding. Right now, they are all claiming they are going to solve the problem and raising money based on those claims. The vast majority of the mines will never be built.

For example, Greenland is not going to solve the US or Europe’s rare earths supply chain issues.

The Government, financial institutions, media, and investors need to understand the deposits and the risks they come with to ensure we are funding the right projects to take advantage of this window of political opportunity.

A lot of people are claiming to be experts

There are suddenly a lot of rare earths and permanent magnet experts online. This is very niche industry that requires a tremendous amount of knowledge and experience across everything from mining to advanced manufacturing. And this on top of understanding Chinese export policy and internal CCP machinations. Be careful who you listen to (And this includes me!).

Some folks I listen to…

• Industry leaders - Benchmark Minerals Intelligence, BloombergNEF, Project Blue, Fastmarkets and other industry experts

• On all things China - I think Trivium is the leader in understanding Chinese policy and could not recommend their work enough.

• NY Times, Bloomberg, FT, and Reuters all provide great insight.

• The Rare Earths Observer on Substack and David Abraham

And please let me know if there any you recommend.

The goal isn’t to win or “dominate” — it’s simply to survive.

The United States and allies will never replace China as the dominant player in rare earths and permanent magnets. And for many reasons, that is a good thing - most Americans do not want to live in areas with severe environmental damage.

The goal is to build a strong enough supply chain to survive China’s most draconian restrictions without them degrading our manufacturing or national security capabilities. So when you look at the IEA data showing all red bars representing China’s dominance, remember the goal is to not make that all blue to represent the US. The goal is to build up enough market share to survive China’s next move. The US has plenty of other industries they can dominate in.

Those are my thoughts on the current situation. I am sure I am missing things (or I’m wrong about things) but only time will tell. I will be back next week with a new post.

I am new to this but please let me know what you think of my Substack. What do you like? What do you hate? And what topics would you like discussed?

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The Trump administration is increasingly using equity investments as a tool of industrial policy and this week, Dr. Tom Moerenhout and I thought through what it means for Columbia University’s Center on Global Energy Policy. Full article is below.

Energy Explained - Q&A: How the US Is Using Equity Stakes to Support Domestic Critical Minerals Development

I wanted to draw attention to one section-

Will government equity stakes help raise private capital?

Yes and no. The firms that received US government equity stakes saw an immediate jump in their stock price because of the halo effect of government backing, but there are potential consequences for other companies in the sector. Equity stakes imply that the government is picking winners (and implicitly losers) without a competitive process or, for the time being, without a transparent due diligence process.

And when the US government takes equity positions in specific critical minerals firms, it implicitly signals that unsupported projects face higher risk. That can make early-stage investment more expensive and steer corporate attention toward political capital rather than project fundamentals and productivity. Less politically savvy firms whose operational and financial performance are actually superior could face blowback in this environment.

Equity investments are a key mechanism to support projects, and it is good the Administration is willing to be creative. However, it remains to be seen if it is the best tool to build out a domestic supply chain. And I am especially worried about how they pick the projects. You do not need to be in DC long to understand the impact of political connections, especially in sectors where expertise is nascent or limited.

Critical minerals (especially rare earths) are dominating the conversation right now. We have the opportunity to grasp this moment and support projects that build out new supply chains. But if the Administration focuses on projects because of their political connections over project fundamentals, we will let this opportunity pass without making meaningful change.

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President Trump and Australian Prime Minister Anthony Albanese signed the “United States-Australia Framework For Securing of Supply in the Mining and Processing of Critical Minerals and Rare Earths” on Monday in Washington promising increased joint government investment in critical minerals. Below is my breakdown of what the deal means and doesn’t mean going forward.

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It is very good news that the Trump Administration has moved from talking about critical minerals deals with Greenland and Ukraine to Australia. The Aussies have an abundant supply of natural resources, mining experts, and real projects that can help build a secure supply chain. This deal is good news.

But please remember, one agreement alone won’t solve our broader challenges. No single policy or partnership can fix the United States’ critical minerals vulnerabilities overnight. Sustained commitment, through more deals and long-term policy continuity, is essential. This deal will help over the next 5-10 years but it does not get the US out of the immediate emergency. Mining and processing projects take time and sustained commitment is necessary to support the projects.

The Framework provides financing to key projects but the success of additional investment and policy mechanisms will come down to implementation.

First the good news - immediate investment

Through the Framework, Australia and the US will provide $1 billion in financing to processing or other midstream critical minerals projects. Processing is the key bottleneck the US needs to unlock for supply chain security, but it is also a key focus for Australia. Building out mineral processing remains a strategic goal for Australia as they work to capture more value from their abundant natural resources. But similar to the US, high operating expenses had made processing cost prohibitive. For example, despite being the largest producer of lithium, Australia exports over 90% of their mined lithium (spodumene concentrate) to China for processing.

Part of the $1 billion is joint investment in the Alcoa gallium refinery (discussed below) and Australia’s equity investment in the Arafura Nolans rare earths project in the Northern Territory of Australia. In the current landscape where some rare earths projects are getting undeserved attention, Arafura’s project is a mine, separation and processing and it already has offtake agreements and debt financing. These are the projects the US and allies should be supporting.

If the US wants to support an American company in Australia, Albemarle and their Kemerton lithium hydroxide processing facility is the only major project. But additional financing alone would not allow the project to expand like they originally planned.

Financing alone will not build out processing capacity in the United States and Australia, and it remains unclear how additional policies will be implemented.

Biggest remaining question - How will price mechanisms and standard based trading work?

“The participants will work to protect their respective domestic critical minerals and rare earths markets from non-market policies and unfair trade practices, including through the adoption of standards based systems in which those who adopt the standards can trade freely and within a pricing framework including price floors or similar measures.”

These policies are necessary to support domestic processing but how these policies will work is very unclear. The language follows the G7 Critical Minerals Action Plan on the topic. Australia has been a vocal supporter of a standards based trading systems for critical minerals that would favor more sustainable (less carbon emissions or less polluting) production, which happens to benefit their mining operations. They have been especially vocal in light of decreased nickel production in Australia following the rise of nickel production in Indonesia. Leading players have called for a “green premium” but the market has rejected this idea and Indonesia’s market share continues to grow. It remains to be seen what standards the trading system would be based on, who would agree to the system, how it would impact downstream buyers, and how it would all be implemented.

Pricing mechanisms seem to be a more likely scenario, but this uncertainty there too. A price floor mechanism was included in the DoD- MP Materials deal. And speaking about potential mechanisms for critical minerals, Treasury Secretary Scott Bessent told CNBC, “So we’re going to set price floors and the forward buying to make sure that this doesn’t happen again and we’re going to do it across a range of industries.” Price support mechanisms are a more competitive approach to supporting the industry as multiple companies could benefit from the support. But the support could very expensive if they extend it to a large series of commodities. Any policy would need to be well crafted.

BIG investment numbers, but they should come with an *asterisk*

“$2.2 billion in financing, unlocking up to $5 billion of total investment, to advance critical minerals and supply-chain security projects between our two countries” sounds like a very big deal. And it is, if it happens.

The $2.2 billion is in the form of Letters of Interests (LOIs) from U.S. Export-Import Bank (EXIM). EXIM issued seven LOIs to Australian based projects - Arafura Rare Earths, Northern Minerals, Graphinex, La Trobe Magnesium, VHM, RZ Resources, and Sunrise Energy Metals. Six of the seven LOIs were issued through the EXIM- Export Finance Australia “Single Point of Entry” framework which was created in 2023. It is good to see the export credit agencies continue to collaborate and build on work in previous Administrations. The most likely financing mechanism would be their Supply Chain Resiliency Initiative. The SCRI is a vital new resource for EXIM allowing them to finance international critical minerals projects if it supports domestic manufacturing.

But LOIs does not guarantee financing or even mean they are likely to get financing. LOIs are strictly a sign EXIM will review the project and could potentially finance the project. A cursory review of EXIM’s previously LOI’s shows they hand out LOIs a lot more than they actually finance projects (which makes complete sense). It is important to remember this when discussing the total investment in this deal. EXIM will need to do the proper due diligence on these projects before deciding on final investment decisions.

Biggest Immediate Impact - DoD Investment into Western Australian Gallium Refinery

As part of the Framework, the White House announced the DoD will invest in a 100t per year gallium refinery in Western Australia. The Aussie PM and Alcoa confirmed the investment will go into the proposed Alcoa gallium refinery at an Alcoa alumina refinery in Western Australia. The investment will most likely be done through the Defense Production Act (DPA) since it is allowed to invest in Australia (along with Canada and the UK). However, Congress needs to reauthorize DPA before the investment can go forward. Alcoa is a Pittsburgh based so the investment supports an American company. Australia will also provide $200 million in concessional equity finance for the project.

Total US demand for gallium was 19mt in 2024 meaning this facility will easily meet US’s demand when it reaches full capacity. While the US might continue to invest in small innovative projects domestically, it seems highly unlikely the US will invest in any additional gallium facilities. (Much to the a chagrin of a wave projects that claimed they could produce gallium)

What is gallium? Why is this important? and why does the US need to invest in an aluminum company to get gallium?

• Gallium is soft, silvery metal vital for advanced technologies and defense applications. Its most important use is as a compound in gallium arsenide (GaAs) for semiconductor wafers and gallium nitride (GaN). Both compounds are used in advanced technologies and defense and aerospace applications.

• The US needs to invest in gallium production because China accounts for nearly 99% of global low purity gallium production. But they implemented an export ban on gallium in 2024 (after previously implementing an export license restriction) restricting the US’s access to gallium. The export restriction also impacted Japan, who has a strong midstream sector (companies that transform low purity gallium into high purity gallium products), which the US tech industry relies on.

• Gallium is not mined or produced by itself. Instead gallium is produced as a by-product of bauxite or zinc refining. The US invested in an aluminum company because bauxite is processed into alumina and then smelted into aluminum. Usually, most alumina refineries process bauxite without capturing gallium because it is low value and not worth additional infrastructure. But the investment will allow Alcoa to capture the gallium byproduct during the refining process. China became the global leader in gallium production because they mandated their alumina refineries capture gallium.

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The biggest (and happiest) winner in this investment is Japan. The project is a trilateral investment between Australia, Japan, and the US. Japan previously announced they were moving forward with Alcoa on a feasibility study for the project through a partnership with Sojitz, the Japanese trading house. And in July, Japan’s JOGMEC announced an equity investment for a joint study for the refinery. They are using the model (partner with a trading house and an Australian project) they used for REEs for gallium. Japan first proposed this project more than a year ago and had been urgently pushing the United States and Australia to invest — without success, until now.

The remaining question on this project is whether or not it comes with a long-term offtake agreement or price floor. This is another proposal Japan previously pushed for and is necessary to make this project successful in the long run. The refinery will be more expensive to operate than Chinese facilities meaning they could be threatened if China oversupply the market and depresses the price. Any long term stabilization mechanism would guarantee the project’s economic viability during this period.

Continuation of previous policies

Parts of the Framework are a continuation of ongoing work or reframing work announced during the Biden Admin. The Australia-US Critical Minerals Task Force was run by the White House and Madeleine King, Minister for Resources of Australia. The Task Force or multilateral mechanisms like the MSP worked on similar things announced in the Framework including;

• “mobilize government and private sector support including for capital and operational expenditures via guarantees, loans, or equity; finalization of offtake arrangements; insurance; or regulatory facilitation.”

• “jointly identify projects of interest to address gaps in priority supply chains”

• “The participants will work together with third parties as appropriate to ensure supply chain security and utilize existing engagement mechanisms.”

• “assist in mapping mineral resources in Australia, the United States, and elsewhere as mutually determined, to support diversified critical mineral supply chains.”

Kudos to the Australian Embassy in DC and the entire Australian Government

Australia knew critical minerals was their key to working with this Administration, they stayed focus on it, and they now have a framework making Australia a key US partner, while helping their economy.

Earlier this year, the team at the Australian Embassy went around DC trying to figure out who were the right people in Trump Administration to make a critical minerals deal happen. They had some initial difficulties just trying to find who to talk to as it was not abundantly clear. They obviously found the right people and made it work through a lot of hard work. Congratulations to them.

One Thing I Know To Be True (or not true)

President Trump said “In about a year from now we’ll have so much critical mineral and rare earth that you won’t know what to do with them.”

That is not true.

I will reiterate, this is going to take time. Most likely none of the projects mentioned in the deal will be producing next year. But DC needs to remain focused on the issue if they want to solve our challenges.

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