Barely noticed in the firehose stream of presidential activity since the inauguration was a brief Oval Office mention of cutting a deal with Ukraine for access to its critical minerals. Securing steady access to uranium, the rare earth elements, and other critical minerals is a natural priority for an America First agenda, so President Trump’s February 3 statement is unlikely to be his last. Changes to the tax code, permitting reform, regulatory incentives, and partnerships with allies as well as troubled nations are among the actions to watch for.
A Bipartisan Issue
Leaders of both parties agree that action is needed. “Whether it’s critical minerals with China … or uranium from Russia, we can’t be dependent on them,” Secretary of the Interior Doug Bergum asserted in his confirmation hearing. “We’ve got the resources here. We need to develop them.” Virginia Senator Mark Warner (D, VA) recently charged, “China dominates the critical mineral industry and is actively working to ensure that the U.S. does not catch up.” He urged, “The U.S. must, alongside allies, take meaningful steps to protect and expand our production and procurement of these critical minerals.” President Biden’s State Department was even more blunt, asserting that China is intentionally oversupplying lithium to “lower the price until competition disappears.”
Several recent developments have increased U.S. policymakers’ concerns about future supplies of critical minerals. New technologies, including artificial intelligence, promise to dramatically boost demand. China, meanwhile, is using new export control laws to curtail exports to the United States. A resurgent war in the eastern provinces of the Democratic Republic of the Congo (DRC), ostensibly over tribal rivalries, is actually a fight over the country’s rich mineral resources. These include gold and diamonds, but also coltan, an ore from which tantalum is extracted. Tantalum is extremely valuable for its use in the capacitors found in smartphones, laptops, and medical equipment.
The number of minerals in question (51), the usual number of steps in the production chain (4), and the variety of international agreements, public laws, private initiatives, and emerging technologies add up to a dizzyingly complex set of issues. Nevertheless, the bipartisan alignment evident in the above statements signals that impacted industries should watch closely for fast-moving legislative and regulatory developments.
Market Overview
Critical minerals are essential for a long list of industrial and defense-related needs. Attention is often focused on the 17 ‘rare earth elements,’ (REEs) but the U.S. Geological Survey (USGS) has a broader list of 50 mineral commodities that are critical to the nation’s economy and national security. Uranium is excluded by a statutory definition but is often tracked in parallel. Together, these 51 elements are used for a far wider array of products than is often recognized. The 17 REEs alone are also needed for oil refining, guided missiles, radar arrays, MRI machines, computer chips, hydrogen electrolysis, lasers, aluminum manufacturing, cameras, jet engines, satellite manufacturing, and a long list of other advanced applications.
The United States is dependent on foreign sources for 95 percent of the REEs it consumes, and three-quarters of those imports come from the People’s Republic of China. Russia has a monopoly on the uranium needed for the most advanced reactors. Troubled nations like Burma and the Democratic Republic of the Congo dominate production of cobalt, lithium, tantalum, tin, dysprosium, copper, and terbium. The European Union, which relies on the same sources, took action last year with the Critical Raw Materials Act (CRMA), which seeks to strengthen Europe’s strategic autonomy on the supply of what it terms Strategic Raw Materials (“SRMs”) and a broader category of “Critical Raw Materials” (“CRMs”).
China’s dominance of critical minerals markets is the result of intelligent planning that coincided with a surge in demand. China now dominates the critical minerals space through most of the supply chain. It extracts up to 70 percent of critical minerals and controls about 90 percent of global processing capacity. It is also a major producer of the components and end-use technologies that rely on critical minerals. In the battery space alone, the International Energy Agency assessed last year that China’s capacity continued to exceed projected demand. It controls 85 percent of the world’s battery cell production capacity, 90 percent of cathode capacity, and 98 percent of anode material production capacity. Years of government support have, the IEA says, “set the stage for considerable price competition and consolidation.”
Russia, meanwhile, has emerged as the dominant player in uranium markets at a time when nuclear power appears to be on the verge of a renaissance. Once strongly opposed by the political left, environmentalists have warmed to nuclear as a carbon-free energy source. The incredible energy consumption of artificial intelligence data centers has prompted U.S. tech companies to turn to nuclear generation including potential investments in small modular reactors. Russia, however, controls about 40 percent of global uranium enrichment and is the only commercial supplier of high-assay, low-enriched uranium (HALEU), which is needed for the most advanced reactors.
The imbalance in global minerals markets is largely unrelated to the distribution of deposits in the ground. Environmental concerns associated with mining and processing operations have pushed activity out of the U.S. Labor costs, regulation, and volatile prices have also disincentivized domestic investments. At the same time, a statutory effort to address human rights issues forced American companies out of the DRC. Now, however, policymakers are feeling new pressures which presage changes in policy. The increasing popularity of electric vehicles, the push for cleaner energy sources, competition concerns with China, defense priorities, the advent of artificial intelligence, and President Trump’s America First agenda all point to increased on-shoring of critical minerals production. “Friend-shoring” will inevitably also be part of the mix, as President Trump implied in his comment on Ukraine. This shift in priorities will implicate trade policy, permitting, land use, tax incentives, foreign policy, education policy, environment, human rights, and many other policy ‘silos.’
Domestic Policy
Executive Orders and Regulation. On the first day of his second term, President Trump signed three executive orders that mentioned critical minerals. One was intended to end what this White House calls the Biden Administration’s “electric vehicle mandate.” Mining industry analysts, however, predict little impact on global demand for lithium and other critical minerals. Most of the President’s deregulatory agenda will require months-long processes of agency rulemaking which will include public comment periods. As with other areas of policy, the Trump Administration is emphasizing domestic production over imports, but access to foreign sources will remain essential for the United States.
Tax Incentives. As Congress works to extend key provisions of the 2017 Tax Cuts and Jobs Act, new incentives for domestic production may be considered and old ones may be altered or repealed.
- President Trump has advocated for a 15 percent corporate rate for domestic manufacturers, which would likely apply to minerals processing but not extraction.
- The 2022 Inflation Reduction Act included provisions to improve electric vehicle battery supply chains. Notably, the EV tax credit was made conditional on sourcing of battery minerals (lithium, nickel, cobalt, and graphite) from the U.S. or countries with which the U.S. has a free trade agreement. The requirement is phased in and will cap at 80 percent in 2027. Industry leaders close to the President have asserted that the EV market has matured and the tax credit should be eliminated.
- The IRA also included production tax credits, tax incentives for investments in recycling technologies, and project financing for new mining and processing facilities that support domestic EV battery production. The §45X Advanced Manufacturing Production Credit subsidizes production of component parts and critical minerals used in clean energy equipment. This and other provisions of the IRA may be repealed or modified as Congress looks for offsets.
Permitting Reform Legislation. Senator Joe Manchin (D, WV) introduced the Energy Permitting Reform Act last year with Sen. John Barrasso (R, WY). It was approved in committee but never voted on by the Senate. House Natural Resources Committee Chairman Bruce Westerman (R, AR-4) held a hearing on more aggressive legislation to reform the National Environmental Policy Act (NEPA). Republican control of the Senate improves the odds of a uniform approach in the 119th Congress, but legislation will still require 60 votes in the Senate, which currently has 53 Republicans.
Foreign Policy
Ukraine Support. On February 3, President Trump said, “We’re looking to do a deal with Ukraine, where they’re going to secure what we’re giving them with their rare earths and other things.” The unscripted remark seemed to describe a deal, which may have been initiated by Ukraine, in which American aid continues in exchange for guaranteed access to Ukraine’s rich deposits of lithium, titanium, and other elements.
The Lobito Corridor. President Biden’s last foreign trip was to Lobito, Angola, the terminus of a 123-year-old colonial railway the U.S. and Europe have pledged to rebuild. The 1,200-mile railway leads directly to massive deposits of cobalt, lithium, and other minerals in Zambia and the DRC. President Trump has so far focused on domestic production, but Secretary of State Marco Rubio has previously promoted U.S. reengagement in Africa in pursuit of stable sources of critical minerals.
Bridge to DRC Act. Authored by Rep. John James (R, MI-10) in 2024, this bill would require Executive Branch agencies to develop a plan for reengagement with the DRC mining sector, including efforts to improve the business climate, improve labor conditions, and ensure mining revenues benefit the people of the DRC. The bill has not yet been reintroduced in the 119th Congress.
Global Strategy for Securing Critical Minerals Act. In July, Senators Mark Warner (D, VA) and Marco Rubio (R, FL) introduced S.4712, The Global Strategy for Securing Critical Minerals Act, which would have increase financial and diplomatic support for critical minerals projects in friendly nations outside the United States. The bill has not yet been reintroduced.