Treasury Secretary Scott Bessent recently unveiled plans to expand the United States’ national stockpile of critical minerals, including lithium and rare earth elements essential for renewable energy technologies and military applications. This move represents a shift in government policy as the U.S. seeks not only to stockpile these vital resources but also to acquire stakes in companies that supply them.
Historically, the U.S. government has maintained a stockpile of essential minerals for decades, but the new strategy introduces taxpayer ownership in mining enterprises. This investment approach carries inherent risks, particularly given the volatility of the mining sector, which is characterized by fluctuating market conditions and narrow profit margins. With the U.S. taxpayer now acting as a shareholder, Congress must ensure robust oversight, transparent disclosure of investment risks, and a fair return on these investments.
Concerns have been raised regarding the potential for an oversupply of minerals stemming from the current boom, which is fueled by government subsidies. The term “rare earth” can be misleading; according to the U.S. Geological Survey, these minerals are relatively abundant. Former President Donald Trump emphasized this point during a conversation with the Australian prime minister on October 21, 2023, suggesting that the market could soon be flooded with critical minerals, potentially driving their value down to around $2 each.
Three companies—Trilogy Metals, LithiumAmericas, and MP Materials—have benefited from significant public financing through programs established by the Defense Production Act, which allocated $13 billion in grants and $350 billion in financing under the One Big Beautiful Bill Act. The recent downturn in lithium prices highlights the risks associated with these investments, underscoring the importance of congressional scrutiny.
Publicly traded mining companies are typically required to disclose specific risks to investors, including the profitability of their projects. However, an executive order signed by President Trump in March directs public funds to mining initiatives without such disclosures, raising concerns that taxpayers could become shareholders in ventures that may never yield profits.
Congressional oversight is imperative, particularly in examining potential conflicts of interest between agencies managing taxpayer-owned shares and those issuing permits for mining activities. The current regulatory framework governing U.S. mineral supply chains is largely influenced by the outdated 1872 Mining Law, which allows individuals and companies to privatize public mineral resources without compensating American taxpayers, the rightful owners of these resources.
Instead of nationalizing the mining industry, Congress is encouraged to adopt the Mining Waste, Fraud and Abuse Prevention Act, proposed by Senator Ben Ray Luján of New Mexico. This legislation aims to modernize the mining regulatory landscape by enhancing mineral security, providing land-use certainty, and ensuring fairness for taxpayers.
Addressing the challenges within the mineral supply chain also requires innovative approaches, such as recycling and utilizing alternative materials. For instance, the Department of Energy’s Critical Materials Institute has developed industrial motor magnets using bismuth and manganese, which perform comparably to those made from rare earth elements.
To foster innovation and support research and development, the government should focus on advancing new technologies rather than investing in traditional mining operations. While stockpiling minerals remains a necessary measure, promoting the development of new materials and approaches will better secure the mineral supply chain than the current strategy of owning shares in private mining companies.
Aaron Mintzes, deputy policy director at Earthworks, emphasizes the importance of rethinking U.S. mineral policy. By prioritizing innovation and updating antiquated mining laws, the government can more effectively address the complexities of mineral supply chains, ultimately benefiting taxpayers and the environment alike.
