The federal government has begun efforts to support foreign mineral projects that exclude China as part of efforts to strengthen the U.S. supply chain.
The Export-Import Bank (EXIM), a federal agency that helps finance private projects, voted to approve an initiative to fund overseas projects that ultimately supply minerals used in the United States.
Given China's dominance in the mineral market, the initiative specifically excludes Chinese projects. China is an important base for mineral production and processing, responsible for 90% of the world's rare earth refining.
“Through this unique new financing tool, EXIM will provide U.S. businesses with access to critical resources and reduce their financial dependence. [China]“Managing our supply chain and fostering a stronger and more resilient domestic manufacturing base,” EXIM President and Chair Leta Jo Lewis said in a written statement.
China recently announced a ban on exports to the United States of certain minerals that have potential military uses, including gallium, germanium, and antimony.
The Export-Import Bank can already finance mining projects, but one senior official said the new effort's goal is to direct funding to projects that don't typically export enough to the U.S. to receive loans from the bank. Said it was helpful.
Minerals are a key aspect of U.S. security, technology, and climate goals, and are used in semiconductors that power weapons, low-carbon energy sources, and other technologies.
For these reasons, bipartisan officials have expressed concern about China's control of the mineral supply chain.
While the incoming Trump administration is expected to weaken efforts to combat climate change, it may still be interested in strengthening the U.S. mineral supply chain to achieve other goals, but domestic mining is also likely to be promoted.
In recent months, other areas of the federal government have begun new initiatives related to investments in critical minerals.
In October, National Security Advisor Jake Sullivan announced the creation of a new critical minerals market with U.S. allies to extract mineral processing and refining capabilities from China.
Although the proposed loan facility from the Export-Import Bank is not directly related to the White House initiative, the increased price stability provided by the cooperative market could ultimately make export-import bond financing more attractive to investors. According to a senior import and export official, The Hill.
The mineral market is currently suffering from an “illusion of oversupply” created by companies that dominate processing and mining, the person said.
President Biden launched an overhaul of America's critical mineral supply chain in his first weeks in office. This comes ahead of the passage of an anti-inflation law in 2022 that will make major investments in batteries and other environmentally sensitive technologies that rely heavily on minerals and metals.
In September, the government announced other significant investments in battery materials and mineral processing, as well as tariffs on magnets, made possible by the Infrastructure Investment and Jobs Act.
The Chinese Communist Party's House of Representatives Special Committee established a critical minerals working group in June and introduced two bills in December.
It could also work with partner governments and companies to focus on geological mapping and mineral resource assessment, and strengthen training on environmental and labor standards for materials.
The other would introduce a national interest exemption that would allow foreign engineers to work full-time in the United States, with the goal of fostering domestic expertise in the mineral industry.
The United States and Japan signed an agreement on critical minerals in 2023. The agreement included a “circular economy approach to reduce the demand and environmental impact of virgin raw material extraction and related processes.”
