Securing Energy Supply Chains: One Critical Mineral Deal at a Time?

The US government is taking a new approach to financing critical minerals with company equity investments. Are critical mineral equity deals a silver bullet?

The United States government has entered a new era of financing critical minerals projects, deploying tools that go far beyond the grants, loans, and tax incentives that have dominated US industrial policy for decades. Over the past year, the federal government has ramped up its investment strategy with a series of equity stakes in private critical mineral projects and companies.

These investments underscore the importance of critical minerals to the US economy and national security and demonstrate the lengths to which the US government is willing to go to diversify supply chains. Critical minerals are key inputs to defense, energy, and AI technologies. If the US wants to meet rising electricity demand  while creating more secure energy supply chains, it needs a more reliable supply of critical minerals.

Diversifying critical mineral supply chains will require investment, and government equity is emerging as a favorite tool of the Trump administration to de-risk and stabilize the sector. US critical mineral production is costlier than China’s, and new projects require high up-front capital costs and long lead times. While up-front investment from the federal government can help push projects forward, their long-term success will ultimately depend on market stability and sustained product demand. So far, critical minerals projects that have received equity investments have experienced jumps in their stock prices and additional private sector investment.

Yet, while equity deals can shore up or kick-start projects, it is yet to be seen whether they can create the market signal required for a sustainable operating environment. To build a durable US critical mineral industry, federal supply-side investment, like equity, must be paired with demand-side support to create a sustained market.

In the meantime, developing a Congressionally authorized program that follows the critical mineral equity investment framework proposed in this article can strengthen deals and create a suite of coordinated investments that help stabilize the critical minerals market.

Why is the critical mineral industry attracting government investment?

Critical minerals are significant inputs to a broad array of technologies in different industries, including semiconductors, permanent magnets, electric motors, transmission, batteries, solar photovoltaic cells, wind turbines, and advanced industrial equipment. Key minerals to the energy transition include copper, gallium, nickel, rare earth elements, graphite, lithium, and cobalt. These minerals are used in everything from chips to cooling systems in data centers to actuators and alloys in specialized defense equipment.

The critical mineral market is concentrated in a few countries, creating the potential for supply disruption, with China dominating the critical mineral mining and refining market. The US Geological Survey found that the US relies on China for 24 mineral commodities, and China is the leading producing nation for 30 critical minerals globally. China controls the global production of approximately 77% of natural graphite, 70% of rare earth elements, and 98% of gallium.

Market concentration in China has created complex trade dynamics and market uncertainty. In 2023, China announced export controls including permit requirements for exports of gallium and germanium and a ban on rare earth extraction and separation technologies. In the spring of 2025, the US announced import tariffs on China, and China announced export controls on seven heavy rare earth elements. US investment in critical minerals would reduce dependence on China by creating a new steady supply.

Government critical mineral equity deals

The US government has historically invested in critical mineral companies to spur domestic industry, promote innovation, and stockpile key national security inputs. These investments have mainly been grants and loans managed by the Department of Energy, Department of Commerce, Department of Defense, and the US International Development Finance Corporation.

Tax credits have also been used to incentivize domestic production of critical minerals and battery components, such as the Advanced Manufacturing Production Tax Credit (45X), the Qualifying Advanced Energy Project Credit (48C), and the now phased out complementary New Clean Vehicle Credit, which required domestic critical mineral and battery inputs to increase domestic demand.

In 2025, we saw a series of announcements from the US government providing up-front capital to acquire equity stakes in critical mineral mine projects. While equity investments are not new for the US government, the quantity of equity-based investments in the critical mineral sector is, with 7 projects being announced over the past year.

These critical minerals deals have taken stakes in companies or specific projects, such as through a special purpose vehicle, a legal entity created for one specific project separate from a parent company. The deals have included equity stakes, preferred stock, warrants for future stock purchases, and in some cases minority positions on boards, price floors, and offtake agreements.

Historically, federal equity investments have been used relatively sparingly and often in response to specific economic or strategic circumstances. However, US government equity stakes in private companies have crossed sectors and administrations. In 2008, the US Department of the Treasury purchased preferred stocks in several banking and automotive companies through the Troubled Asset Relief Program to stabilize the US financial system. In 2025, the US government made equity investments in sectors beyond critical minerals, such as Intel and Nippon Steel.

What trends do we see in critical mineral deals passed so far?

• Many of the projects are already in development or actively under construction.
• The majority of projects are funded by the Department of Defense.
• Many of the projects are financed by more than one federal agency.
• The US government is restructuring existing funding from previously awarded grants and loans into these new deals.
• Deals have been announced alongside already committed private investment. Three deals had subsequent offtake agreements or investments with private companies.
• The majority of projects are for facilities based in the United States. The exception is the Alcoa Sojitz Gallium Recovery Project to build a gallium refinery in Western Australia. This project was a joint investment with Australia and Japan.

The MP Materials deal stands apart because the equity investment is complemented by a guaranteed price floor and an offtake commitment. For 10 years the US government will purchase at $110 per kilogram the rare earth elements product neodymium-praseodymium or price match if purchased by another company for a lower price. The deal also included a 10-year commitment to purchase 100% of the magnets produced at a proposed facility. This sets a powerful demand safeguard to ensure the increased output has a market that can keep the company afloat.

At the time of the deal, China had implemented a tariff of 125% on US imports, including rare earth concentrates from the Mountain Pass mine. Rare earth materials are critically important to defense, and the US government stepped in to ensure the facilities were kept online.

The deals that have succeeded MP materials have not included offtake agreements or price floors. In February this year, the White House launched a new US Strategic Critical Minerals Reserve, Project Vault, to store critical minerals for civilian industries at facilities across the United States, backed by the Export-Import Bank of the United States (EXIM).

A framework to finance the future

As a key input to energy, the US government should bolster investments in critical mineral supply chains to increase domestic capacity and diversify global supply. Equity investments are one financing mechanism that with careful design could help stabilize the critical minerals market.

A congressionally authorized program that provides equity investments in critical minerals projects would codify some of the benefits of government stakes with the purpose of strategically building a portfolio of investments that support long-term market stability. A congressional program would set safeguards to protect market stability and taxpayer funds. Whether establishing a new program or consolidating deals into an existing one, a centralized federal program could sharpen the government’s understanding of the long-term impacts of equity investments while allowing it to build out expertise to better support potential board representation and eventual exit strategies. The program could be cross-sector, covering projects to support acute energy and infrastructure supply chain risks or targeted at critical mineral projects.

With more dedicated resources to evaluate projects, the program could consider the following project framework to maximize market-wide impact and strengthen critical mineral supply chains.

So far, deals have been financed by the Departments of Commerce, Defense, and Energy. A new program could either sit in one of these existing departments or in a new, more targeted organization.

Going beyond equity deals

Equity deals demonstrate the US government’s willingness to intervene more directly in critical mineral supply chains. They can catalyze investment, accelerate projects, and stabilize strategically important facilities.

To secure the production of minerals essential to energy, defense, and digital infrastructure, the United States should pair capital with predictability and build a coherent, transparent, and strategic program capable of steering investment where it has the greatest impact.

While equity deals provide strong up-front capital, equity alone is not enough. Without demand-side policies that guarantee buyers, stabilize prices, or provide incentives for domestic sourcing, even well-capitalized projects may fail to thrive.