Lawmakers propose $2.5B agency to boost production of rare earths and other critical minerals

U.S. Launches Aggressive Push to Break China’s Critical Minerals Dominance

A bipartisan group of lawmakers has proposed creating a new agency with $2.5 billion in funding to boost domestic production of rare earths and other critical minerals, adding to the Trump administration’s ongoing efforts to reduce America’s dependence on China for these vital materials.

The bill, introduced by Sen. Jeanne Shaheen (D-N.H.) and Sen. Todd Young (R-Ind.) on Thursday, comes as Washington grapples with Beijing’s dominance in a market crucial to high-tech products ranging from cellphones and electric vehicles to advanced military equipment including jet fighters and missiles.

China currently processes more than 90% of the world’s critical minerals, giving it significant leverage in trade negotiations. This vulnerability became painfully apparent during recent trade tensions when Beijing restricted critical mineral exports to gain an advantage, eventually forcing Washington to ease its technology export controls on China as part of a one-year truce agreed to in October.

The Pentagon has responded by investing nearly $5 billion over the past year to secure access to these materials. Defense Secretary Pete Hegseth revealed on Monday that the Pentagon deployed over $4.5 billion in capital commitments in the past five months alone to close six critical minerals deals aimed at freeing “the United States from market manipulation.”

These investments include a $150 million preferred equity stake in Atlantic Alumina Co. to save America’s last alumina refinery and build its first large-scale gallium production facility in Louisiana. Last year, the Pentagon purchased $400 million of preferred stock in MP Materials, which owns the country’s only operational rare earths mine in Mountain Pass, California, and entered into a $1.4 billion partnership with ReElement Technologies Corp. to build a domestic supply chain for rare earth magnets.

The government’s approach marks a significant shift toward what some analysts describe as a form of state capitalism, with direct equity investments and price guarantees for strategic resources—tactics more commonly associated with China’s economic playbook than traditional Republican policies.

“Despite the dangers of political interference, the strategic logic is compelling,” wrote Elly Rostoum, a senior fellow at the Center for European Policy Analysis, suggesting this model could be “a prudent way for the U.S. to ensure strategic autonomy and industrial sovereignty.”

The bipartisan bill takes a more market-based approach by establishing an independent body charged with building a strategic stockpile of critical minerals, stabilizing prices, and encouraging production both domestically and with allied nations. Sen. Shaheen called the legislation “a historic investment” to make the U.S. economy more resilient against China’s dominance, while Sen. Young described it as “a much-needed, aggressive step to protect our national and economic security.”

Rep. Rob Wittman (R-Va.) introduced the House version of the bill.

Companies across the industry have welcomed the administration’s intervention. “He is playing three-dimensional chess on critical minerals like no previous president has done,” said NioCorp’s Chief Communications Officer Jim Sims, referring to Trump. “It’s about time too, given the military and strategic vulnerability we face by having to import so many of these fundamental building blocks of technology and national defense.”

The Trump administration is also pursuing international partnerships to secure critical mineral supplies. In October, Trump signed an $8.5 billion agreement with Australia to invest in mining operations there. The administration has also expressed interest in Greenland, potentially as a future source of rare earth elements.

The global nature of this challenge was highlighted earlier this week when finance ministers from G7 nations met in Washington to discuss their shared vulnerability in critical mineral supply chains. U.S. Treasury Secretary Scott Bessent urged the group to increase supply chain resiliency and thanked them for working toward “decisive action and lasting solutions.”

Previous congressional efforts to address critical minerals supply have been limited in scope and often abandoned after China eased access restrictions. The Biden administration had focused on increasing demand through electric vehicle and renewable energy incentives, while the Trump administration has largely eliminated those incentives in favor of directly boosting production.

As global competition for these resources intensifies, the U.S. approach represents a fundamental shift in industrial policy, with implications for national security, economic competitiveness, and geopolitical relationships in the decades ahead.