US Critical Minerals Strategy: $5 Billion Fund to Secure Supply Chains
The United States government is negotiating the establishment of a $5 billion investment fund dedicated to critical minerals projects, marking its most significant venture into strategic mining dealmaking. This joint venture between the US International Development Finance Corporation (DFC) and New York-based investment firm Orion Resource Partners would create a powerful financial mechanism to secure supply chains for minerals essential to advanced technologies and national security.
The proposed structure would see both parties contribute equally, scaling up over time toward the $5 billion total. This approach mirrors Orion's recent $1.2 billion venture with Abu Dhabi sovereign wealth fund ADQ, demonstrating a growing trend of public-private partnerships in critical minerals energy transition development.
Why Are Critical Minerals Becoming a National Security Priority?
Growing Concerns About Global Supply Vulnerabilities
The federal administration has prioritized securing access to critical minerals including copper, cobalt, and rare earths amid mounting concerns about supply chain vulnerabilities. These concerns stem from two primary factors:
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Chinese Dominance: China currently processes the majority of many critical minerals, from copper to antimony, while Chinese companies continue acquiring overseas mining assets to feed domestic facilities.
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Long-term Supply Deficits: Industry analysts project significant shortages for several metals due to insufficient investment, declining ore grades, and lengthy permitting processes for new projects.
According to recent market assessments, these vulnerabilities could lead to price volatility and disruption across multiple strategic industries, particularly as demand increases for minerals essential to the energy transition and defense applications.
Strategic Implications for US Technology and Defense
Critical minerals form the foundation of technologies essential for both economic competitiveness and national security:
- Electric vehicle batteries require lithium, cobalt, nickel, and graphite
- Semiconductor manufacturing depends on gallium, germanium, and rare earths
- Defense applications utilize specialized metals for everything from aircraft to guidance systems
- Renewable energy technologies require significant quantities of copper, silver, and rare earths
The Department of Defense recently launched its first tender to stockpile cobalt since the Cold War ended, highlighting the growing concern about secure access to these resources. Without reliable supplies, U.S. manufacturers face increased costs, potential production delays, and strategic disadvantages relative to competitors with more robust supply chains.
How Will the Fund Operate in Global Mining Markets?
Investment Strategy and Focus Areas
The fund would likely target projects throughout the mineral supply chain, from exploration and mining to processing and refining. Key focus areas may include:
- Copper and Cobalt: Essential for electrification and renewable energy
- Rare Earth Elements: Critical for high-tech applications and defense
- Battery Metals: Including lithium, nickel, and graphite
- Processing Infrastructure: To reduce dependence on foreign refining capacity
Industry experts suggest the fund would need to balance commercial returns with strategic imperatives, potentially accepting longer investment horizons or lower returns on some projects with significant national security benefits. The structure would likely include a mix of equity investments, loans, and other financial instruments tailored to different project stages and risk profiles.
Geographic Targeting and International Partnerships
The administration has signaled interest in specific regions for minerals investment:
- Democratic Republic of Congo: The White House has expressed interest in promoting US investment in Congo's mining sector, which produces approximately 70% of global cobalt
- Ukraine: Officials have mentioned the potential for minerals deals in the country
- Greenland: Previously identified as a region of strategic interest for mineral resources
- Friendly Nations: Partnerships with allies in Australia, Canada, and Latin America
These geographic priorities reflect both resource potential and geopolitical considerations, with particular emphasis on regions where Chinese investment has been dominant. The fund's activities would likely complement diplomatic efforts to strengthen relationships with resource-rich nations through economic development initiatives.
What Previous Investments Has the DFC Made in Critical Minerals?
The DFC has already approved multiple investments in the mining sector through various financial instruments:
| Project | Amount | Type | Details |
|---|---|---|---|
| Syrah Resources | $150 million | Loan | Supports graphite mining in Mozambique with Tesla offtake agreement |
| Lobito Corridor | $550+ million | Financing | Railway infrastructure upgrade to transport minerals from central Africa's copper belt to Angola's Atlantic port |
If finalized at the full $2.5 billion DFC commitment, the Orion partnership would represent the largest in the agency's history, according to government data.
These initial investments demonstrate the DFC's emerging strategy of supporting not just mining operations but also the critical infrastructure needed to move minerals efficiently from mines to markets. The Lobito Corridor project, in particular, represents a holistic approach to supply chain development, creating alternatives to existing routes that may be subject to geopolitical risks.
How Does This Compare to Other US Critical Minerals Initiatives?
Defense Department's Strategic Investments
The Department of Defense has recently made landmark investments in critical minerals:
- Launched its first tender to stockpile cobalt since the Cold War ended
- Made a $400 million investment in US rare-earths producer MP Materials
- Established a supply agreement with a guaranteed floor price to protect MP Materials during market downturns
These investments reflect a whole-of-government approach to addressing critical mineral security, with the Defense Department focusing on materials directly essential to military applications while the DFC addresses broader supply chain resilience.
Legislative Support for Mineral Security
The initiative aligns with broader policy frameworks supporting critical mineral security:
- The One Big Beautiful Bill Act includes provisions for critical minerals pivot strategy
- Additional funding mechanisms are being developed for domestic production capacity
- Tax incentives are being considered to improve competitiveness of Western mining ventures
Together, these initiatives represent the most comprehensive U.S. government approach to critical minerals since the Strategic and Critical Materials Stockpiling Act of 1939, which created the National Defense Stockpile during World War II.
What Role Will Private Capital Play in the Partnership?
Orion's Strategic Position
Orion Resource Partners brings significant expertise and financial capacity to the partnership:
- Approximately $8 billion in assets under management
- Business spanning private equity, private credit, venture capital, and commodity trading
- Established track record as a major financier to the mining industry
Oskar Lewnowski, Orion's CEO, has previously advocated for nation-states to take a more active role in critical minerals markets, urging them to follow China's example by building strategic stockpiles against supply disruptions.
As a specialist mining investor, Orion offers the DFC access to technical expertise, deal flow, and industry relationships that would be difficult for a government agency to develop independently. This complementary relationship allows the DFC to leverage private sector capabilities while providing government backing that may make otherwise marginal projects viable.
Potential Deal Pipeline
Orion is already pursuing strategic acquisitions that align with US critical minerals objectives:
- The firm has teamed with Virtus Minerals (run by US military and intelligence veterans) to bid for Chemaf Resources, a copper-cobalt miner in Congo
- This bid follows the abandonment of a previous deal for a Chinese state-owned arms manufacturer to acquire Chemaf after Congo withheld approvals
Mining industry analysts note that Orion's involvement could accelerate deal execution compared to government-only initiatives, while also potentially improving project economics through commercial discipline and industry expertise. The partnership model also creates opportunities for additional private capital to participate in co-investment opportunities.
What's Next for the DFC and US Critical Minerals Strategy?
Expanded DFC Role Under the Administration
The DFC is positioned to become a more significant component of US foreign and economic policy:
- The White House is seeking to double or triple its investment capacity through an upcoming reauthorization process
- The organization is expected to gain flexibility to invest in wealthier countries and undertake riskier projects
- These changes aim to attract more private-sector participation
These expanded capabilities would position the DFC as a more potent counterweight to China's Belt and Road Initiative, which has provided substantial funding for resource development projects in Africa, Latin America, and Asia.
Leadership Transition
The administration selected Ben Black—son of billionaire Apollo Global Management co-founder Leon Black—to lead the DFC, though Senate approval remains pending. During his confirmation hearing, Black emphasized that the federal agency "should never be crowding out private capital" and should increase engagement with New York financial firms.
Black's background in private equity aligns with the administration's focus on leveraging commercial expertise and capital markets to advance strategic objectives. His confirmation would likely accelerate the DFC's pivot toward more commercially oriented investment strategies in critical minerals and other priority sectors.
How Might This Initiative Impact Global Critical Minerals Markets?
The establishment of this fund could significantly reshape global critical minerals markets through:
- Increased Competition: Creating stronger Western alternatives to Chinese investment in resource-rich regions
- Price Stabilization: Government backing may provide longer-term price stability for strategic minerals
- Accelerated Project Development: Access to capital could speed development timelines for new mines and processing facilities
- Supply Chain Reconfiguration: New investment patterns may redirect mineral flows away from current dominant processing hubs
- Geopolitical Realignment: Resource-rich nations may diversify their partnerships beyond current dominant players
Industry experts suggest that the initiative could potentially reduce price volatility for key minerals by ensuring more predictable investment flows, while also creating opportunities for mining industry innovations to accelerate development timelines.
Market Implications and Industry Response
Mining industry analysts expect the initiative to have several effects on global markets:
- Project Acceleration: Reduced financing barriers could bring projects online faster, particularly for mid-tier mining companies that currently struggle to access capital
- Investment Redirection: Capital may flow toward projects with strategic value rather than purely financial returns
- Processing Capacity Development: New investment in refining and processing could reduce reliance on Chinese facilities
- Standards Enhancement: U.S. government involvement may drive higher environmental and governance standards across the industry
These changes could gradually reduce China's dominant position in global mineral processing while creating more resilient and diverse supply chains for critical materials.
The Broader Context: A New Era in Resource Security
This $5 billion initiative represents a significant evolution in how the United States approaches critical mineral security. Rather than relying primarily on market mechanisms, the government is taking a more active role in shaping global supply chains for strategic resources.
This approach reflects growing recognition that critical minerals represent not just economic assets but national security imperatives. As technology continues to advance and clean energy transitions accelerate, secure access to these materials will become increasingly essential for economic competitiveness and military capabilities.
Mining companies, investors, and resource-rich nations should prepare for a more complex operating environment where geopolitical considerations play an increasingly important role in project development and financing decisions. Those able to navigate both commercial and strategic imperatives will likely find significant opportunities in this evolving landscape.
Recent developments in executive order on critical minerals policy highlight the bipartisan nature of these concerns, while other nations like Australia have pursued similar initiatives through an Australian strategic minerals reserve to enhance domestic security.
Disclaimer: This article contains forecasts and speculation about future government initiatives and market dynamics. These projections are based on current information and expert analysis but should not be considered definitive predictions. Market participants should conduct their own research and due diligence before making investment decisions based on the information presented.
The US in talks to set up $5bn fund for critical mineral deals represents a strategic shift in how the US approaches resource security, moving from primarily market-based approaches to more direct government involvement in securing critical mineral supply chains.
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