The U.S. government is taking significant steps to expand its national stockpile of critical minerals, including lithium and rare earth elements, essential for renewable energy technologies and military applications. Treasury Secretary Scott Bessent announced plans that not only involve traditional stockpiling but also include the government purchasing stakes in the companies responsible for supplying these minerals. This marks a notable shift in U.S. policy, as taxpayers are now becoming shareholders in mining ventures that traditionally operate under volatile market conditions.
Mining is a notoriously unpredictable industry characterized by boom-and-bust cycles. The current strategy, which allows taxpayer money to fund mining operations, raises concerns about the associated risks. Congress is urged to exercise oversight and ensure transparency regarding investment risks, so taxpayers can expect a fair return on their investments. One significant concern is the potential for an oversupply of minerals, driven by government subsidies that could destabilize the market.
The term “rare earth” is somewhat misleading, as these minerals are not as scarce as the name suggests. According to the U.S. Geological Survey, they are relatively abundant. Former President Donald Trump commented on this issue during a conversation with the Australian prime minister on October 21, 2020, stating that in about a year, the U.S. would have such an abundance of critical minerals that their value would plummet, potentially worth as little as $2. This remark likely references the significant financial commitments made through the One Big Beautiful Bill Act, which allocated $13 billion in grants and $350 billion in financing for mining projects.
Three companies—Trilogy Metals, LithiumAmericas, and MP Materials—are now partially owned by taxpayers through public financing initiatives. The recent volatility in the metals market, especially the sharp decline in lithium prices, reinforces concerns that taxpayer investments in these companies might not yield profitable returns.
Typically, publicly traded mining companies are required to disclose risks to their investors, including the profitability of their projects. However, an executive order signed by the president in March has directed public funds to mining projects without these essential disclosures. Such a move could leave taxpayers vulnerable, investing in mines that may not achieve profitability.
There is also a pressing need for increased congressional oversight. Lawmakers should investigate potential conflicts of interest between government agencies managing taxpayer shares and those responsible for permitting mining operations. A critical flaw in the U.S. mineral supply chain is rooted in the outdated 1872 Mining Law, which still governs domestic mining policy. Unlike other countries, which impose conditions on mining activities through leases and royalties, the U.S. allows anyone, regardless of nationality, to privatize public minerals without compensating American taxpayers.
Rather than pursuing nationalization of the mining industry, a more effective approach would be for Congress to support the Mining Waste, Fraud and Abuse Prevention Act, introduced by Senator Ben Ray Luján, a Democrat from New Mexico. This legislation aims to modernize the mining system, ensuring mineral security and fairness for taxpayers.
Addressing challenges in the mineral supply chain also necessitates a focus on innovation. For instance, the Department of Energy’s Critical Materials Institute has developed an industrial motor magnet using bismuth and manganese, which performs as well as, if not better than, those made from rare earths.
Instead of favoring certain mining companies, the government should prioritize fostering innovation, research, and development to enable the market introduction of new technologies. Stockpiling minerals and subsidizing risky mining operations are not innovative solutions. A focus on developing advanced materials, coupled with congressional oversight and updates to outdated mining laws, will more effectively secure mineral supply chains than merely investing in private mining companies.
This commentary highlights the importance of balancing governmental involvement in the mineral industry with the need for transparency and accountability to protect taxpayer interests.
