Washington Must Prioritize Mineral Supply Results Over Political Point Scoring

The year 2032 is now the earliest date by which a U.S. president might next secure re-election to a consecutive second term of office. This rubber-banding poses challenges for efforts to craft durable strategic policies, particularly for complex industries like critical minerals and metals.

On one hand, critical minerals security has strong enough bipartisan support to enable some continuity throughout—and beyond—the incoming Trump administration. On the other hand, successfully fostering a growing domestic critical minerals sector depends on more than broadly-supported initiatives like Department of Defense grants for mines or R&D efforts into next-generation mining and recycling techniques. It also depends upon downstream demand generated heavily by a clean technology sector now squarely in the crosshairs of major policy changes.

While shifts in policy are inevitable in any democratic society, some level of policy consistency is crucial for efforts to develop secure domestic critical mineral supply chains. The United States already confronts a difficult uphill challenge when it comes to developing alternative mineral sources in the face of dominant Chinese producers. Republicans should therefore carefully consider the unintended effects of eliminating subsidies for certain key downstream technologies, downsizing federal programs, or excessively cutting staff at minerals-relevant agencies. Downstream demand for critical minerals is key for strengthening the investment case in upstream capacity, while now is hardly the time to pare down the federal government’s capacity to support new project development.

Similarly, Democratic policymakers and environmental advocates now on the defensive during a second Trump term should think more open-mindedly about future changes to mine permitting processes or federal land management that might significantly benefit critical minerals development and clean energy efforts, even if Republican majorities pursue such reforms in ways that are different from what they might ideally prefer. The past Democratic approach of paying lip service to critical minerals while walling off federal lands from mineral development and erecting new administrative obstacles was neither coherent nor compatible long-term with either U.S. interests or the global energy transition.

Across both sides of the aisle, policymakers interested in critical minerals must pragmatically and non-ideologically evaluate the implications, benefits, and drawbacks of policy changes for mineral industries that may exhibit strong if indirect links to seemingly unrelated legislative provisions. Sustained development of a strong U.S. critical minerals sector will depend on such a rational approach.

Everyone agrees the unobtanium is important

Fortunately, the importance of critical minerals security resonates with Americans across the political spectrum, motivating a number of proposed bipartisan bills with good potential to move forward in the new Congress. Even with Republicans focused on budget tightening to support extension of the 2017 Tax Cuts and Jobs Act, critical minerals remain something that Congress appears quite willing to spend on.

One could group the various new critical minerals policy proposals currently floating around Congress by several key themes. First, a number of bills seek to strengthen coordination on natural resources across the federal government, in some cases establishing new entities tasked with overseeing national strategy. Some examples include the National Critical Minerals Council Act and the Intergovernmental Critical Minerals Task Force Act. Initiatives to better coordinate innovative critical minerals related research and development across government and with U.S. universities, such as the Unearth Innovation Act, similarly strengthen the cohesion of federal technology policy.

At the same time, international partnerships can help address other important U.S. critical mineral needs that our country’s geologic resources alone cannot adequately meet. The STRATEGIC Minerals Act, Global Strategy for Securing Critical Minerals Act, and the Earth Sciences and Cooperation Enhancement Act of 2024, for example, aim to bolster supply chain efforts with U.S. allies and partners.

The second broad category of policy ideas involves direct interventions in critical mineral markets and trade. One promising approach gaining traction involves the use of financial tools to help de-risk domestic critical mineral activities facing price volatility by using price support mechanisms like contract-for-differences, forward contracts, or backstop offtake agreements. Related proposals include the Critical Materials Future Act and the Securing Essential and Critical U.S. Resources and Elements (SECURE) Minerals Act of 2024.

At first blush, trade policy might not necessarily connote a strong intrinsic link with critical minerals strategy. Yet measures to correct for differing standards in the fairness, humaneness, or sustainability of goods in international markets clearly pose meaningful implications for critical metals and materials. The already-enacted Uyghur Forced Labor Prevention Act, for instance, is already significantly influencing global industry due diligence regarding the procurement of battery and automotive raw materials.

A range of recent proposals have also explored border adjustments that charge fees on excessive pollution generated by foreign producers of aluminum or other critical minerals. Recent draft legislation includes the Foreign Pollution Fee Act, FAIR Transition and Competition Act, and Clean Competition Act. Indeed, such policies could help significantly level the playing field for domestic critical minerals producers, correcting advantages that Chinese industry enjoys thanks to low-cost coal-fired electricity and heat.

More controversially, policies such as anti-dumping and countervailing duties seek to correct for overseas industrial policies that establish “unfair” competitive advantages by maintaining unreasonably low commodity prices. The incoming Trump administration has signaled a strong interest in tariffs, targeting not only China in particular but also potentially a broad spectrum of longstanding U.S. trade partners. Such measures could seriously influence the price of not only imported critical metals, but also relevant inputs to the industry such as equipment, chemical feedstocks, mined ores, and intermediate supply chain commodities. Federal policymakers should therefore seriously weigh the possibility that blanket direct tariffs could produce unforeseen and unpredictable consequences for national critical mineral efforts.

What happens to the clean energy and critical minerals nexus?

Yet the prospects for secure, expanded national critical mineral supply chains will also hinge centrally upon the incoming federal government’s attitude towards various energy and industry-related policies contained within the Inflation Reduction Act. The future of the U.S. energy landscape possesses important connections to the nation’s critical mineral security, forming a broader nexus of critical minerals and alternative energy superiority key to competing in tomorrow’s global economy.

In late September, our team released a major report quantifying how electric vehicles and clean energy infrastructure powerfully drive future national demand for many categories of critical minerals. This means that the supply of defense and semiconductor-related minerals often depends upon market trends for advanced energy technologies. For example, we calculated that a long-term full national shift to electric vehicles would require the equivalent of 150% of current U.S. nationwide production of heavy rare earth elements and 1 to 1.5 million tons of battery graphite annually—amounts that vastly exceed rare earth and graphite usage in defense applications like radar systems and aerial drone batteries. Deployment of new electricity generation, transmission, and EVs could similarly demand as much aluminum and nickel as the whole U.S. economy uses today. In many cases, national security uses of critical minerals therefore rely upon and benefit from energy sector supply chains.

Meeting such projected increases in national critical minerals consumption is already far from an easy challenge. But repeal or significant revisions to IRA could significantly weaken the business case for new critical mineral projects both domestically and in allied and partner countries, even further frustrating efforts to expand mineral supplies. Eligibility for the IRA’s Section 30D electric vehicle tax credits, for example, requires manufacturers to source battery critical minerals from the U.S. or from producers based in free trade partner countries, effectively creating a strong and positive incentive for alternative, expanded battery critical mineral supply chains. Many individual mineral projects, from the Talon Metals nickel-copper-cobalt mine in Minnesota to the Syrah Resources graphite processing plant in Louisiana, have leveraged this tax credit to help secure offtake purchase agreements with auto manufacturers.

Similarly, the 10% production cost tax credit for a broad list of applicable domestic critical minerals offered through the Section 45X Advanced Manufacturing Production Tax Credit directly rewards firms that supply materials of strategic national interest. Other important initiatives such as the Department of Energy’s support of promising domestic projects through the Qualifying Advanced Energy Project Credit (48C) and the Loan Programs Office may also depend upon Congress’s approach to statutory tax code changes during the next administration.

The current overconcentration of critical minerals supplies globally stems from muscular Chinese industrial and trade policies, wielded with the express intent to maintain a large share of supply chain control. Beijing’s policies have established a risky market environment that poses barriers to competition too great for free market forces to overcome on their own. Ambitious federal government shifts on trade policy, national minerals strategy, diplomacy, and permitting reforms will not suffice to level the playing field with overseas state-owned enterprises benefiting from powerful subsidy support. U.S. critical minerals security cannot materialize without a backbone of strong public investment and public-private partnerships in both mineral projects and the downstream technologies they support.

Meanwhile, U.S. competitiveness in alternative energy technologies benefits critical mineral efforts as well. Many mineral supply chain processes from graphite refining to metallurgical smelting consume considerable quantities of electricity and industrial heat, with supply and reliability requirements that rival data centers. U.S. producers can never hope to compete on cost with Chinese industries leveraging cheap, polluting coal by using exactly the same technologies. Instead, efforts to expand domestic, economically-viable critical mineral production will necessitate an energy landscape optimized to add new sources of electricity and heat generation easily and at low cost. This reality underscores the importance of a robust national energy strategy that pursues leadership in a broad range of next-generation technologies from nuclear to geothermal to renewables to carbon capture to energy storage. Cheap, abundant energy will vastly bolster development of new critical mineral projects and ensure their resiliency in the face of energy and mineral market volatility.

If it is to succeed, the federal government’s strategic framework on critical minerals must therefore consider critical mineral security and energy abundance as tightly connected, parallel goals. Advanced energy technologies create large-scale downstream demand necessary for upstream mineral supply chain projects to proceed. Meanwhile, mastery of tomorrow’s energy landscape will impart powerful market advantages upon those same critical mineral industries, helping enable supply chain expansion and diversification at far lower cost. As the new Congress deliberates tweaks to the federal tax code and technology-related tax credits in the new year, lawmakers must consistently consider how each change could affect the strategic environment for the critical mineral sector.

Towards a more pro-development federal land policy?

Finally, Republican willingness to pursue policies that reduce unproductive and burdensome regulations on mining on federal land may likely give the Trump administration an upper hand over the outgoing Biden administration when it comes to expanding domestic mining.

In place of deregulation, Democrats under the previous government favored policies such as mine project grants, resource mapping campaigns, and additional permitting agency staff. These types of initiatives certainly help expand domestic mining. However, successfully meeting future critical mineral demand requires considering all forms of industry support. Democrats justified their resistance to permitting process improvements by misrepresenting U.S. mining regulations as outdated despite being among the most stringent in the world. Environmental contingents insisted that, if anything, anticipated increases in mineral demand warranted additional safeguards and flooded policy discussions with unnecessary or lower priority proposals. This false premise ensured that any changes to public land management would have at best produced toothless compromises that added new regulatory burdens for each one removed, as proposed in the Biden administration’s recommendations for mine permitting reform.

The incoming Republican trifecta will have the opportunity to support and expand domestic mining under a more realistic understanding of public land management practices. Least of all, the Trump administration will attempt to undo Biden administration blunders such as revoking the Twin Metals Minnesota lease before completing the project’s environmental review or promulgating the BLM Public Lands Rule which directed land management agencies to overemphasize conservation to preempt mine development. Meanwhile, Republicans in Congress will hopefully continue to pursue nuanced regulatory efficiencies that maintain strong existing standards such as ideas outlined in the Mining Regulatory Clarity Act or Energy Permitting Reform Act, and avoid largely symbolic measures such as the harsher NEPA review deadlines and page limits specified in the Fiscal Responsibility Act.

A Republican government still faces the risk of undermining pragmatic policies with polarized partisan politics that subsequent governments can simply reverse. Namely, general interest in supporting industry may encourage policies that do not specifically target critical minerals and dilute or even threaten support for projects that stand to benefit supply chains the most. Incoming policymakers may, for example, halt the current rulemaking to reduce eligibility for the FAST 41 expedited permitting program from the entire mining sector to just critical minerals projects. Republican preferences for small government may also work counterproductively by cutting regulatory agency staff, reducing their ability to efficiently complete environmental reviews.

Nevertheless, Republican willingness to deregulate provides a better opportunity to expand domestic mine production than Democratic perspectives have allowed. The incoming government, therefore, stands poised to drive important progress in developing a coherent federal critical minerals strategy—one that encourages policymakers to draw from the full suite of tools available, including more open-minded public land management.

Critical minerals coherence, or incoherence?

The new Republican-led federal government is likely to extend targeted policy support to domestic critical mineral supply chain projects while developing a more coordinated overall national critical minerals strategy. Simultaneously, Republicans will likely adjust federal land policies to better facilitate development of domestic mineral resources. Parallel efforts to shrink federal agencies and eliminate spending on key related downstream technologies like batteries, however, could erode or counteract the gains realized through such new policies.

Ultimately, effective federal efforts towards critical minerals security require two factors: persistence and continuity. These are not the same—persistence requires that the federal government show grit and determinedly advance its critical minerals industrial policy even in the face of inevitable setbacks. Tepid resolve that falters quickly at the first sign of discouraging results will not produce more diversified, secure supply chains. Meanwhile, continuity requires that critical minerals strategy not change wildly from Congress to Congress, administration to administration. All of which is to say that critical mineral policy ideas in this new Congress and federal administration will only advance meaningfully—and survive long term—if they can muster at least grudging bipartisan support.

Beyond Washington, legislative proposals and federal agency approaches need to ensure healthy popular support for supply chain projects across a sufficient cross-section of American society. Strategic mineral industries can only flourish with the requisite support of local communities, tribes, and organized labor. Forging such necessary political support is not as difficult as it may sound.

Americans broadly understand that strategic commodities serve the greater national interest, and often show interest in how related economic projects can create opportunities for them and their communities to benefit. They expect operations to follow the law, conduct themselves well, and pay back meaningfully into their host communities. These are reasonable expectations that policymakers can easily reconcile with all of the policy ideas currently circulating across government.

In previous eras of recent American politics, national leaders too often procrastinated critical minerals strategy and pinned their hopes too heavily upon commodity markets easily cowed by muscular Chinese industries and state policies. With such supply chains increasingly wielded for geopolitical leverage in ways that harm global innovation, environmental outcomes, and national interests, U.S. policymakers can no longer afford to punt such responsibilities to their successors. Under these circumstances, one hopes that Republicans inheriting control of the federal government and Democrats in the legislative minority can work pragmatically together to overcome national mineral supply challenges.