By Ginika Igboke
The Trump administration has directed $15 billion in grants, tax credits, and incentives into 15 critical mining and refining projects, including $1 billion in taxpayer-funded equity investments in private companies. However, Defense Department officials told lawmakers that years of sustained investment will be required for domestic industry—particularly defense manufacturers—to reduce reliance on China’s dominance in global minerals markets.
During a Feb. 24 Senate Armed Services Committee hearing, Assistant Secretary of Defense for Industrial Base Policy Michael Cadenazzi said loosening the Chinese Communist Party’s hold on critical minerals will require “sustained aggressive action” and new strategies.
“We do not have 30 years to resolve this issue,” Cadenazzi said. “Rebuilding our critical minerals supply chains is a generational undertaking. It will not be accomplished overnight. The investments we are making today will take years to mature into fully operational, at-scale capabilities.”
According to a November report from the House Select Committee on China, Chinese processors refine 85–90 percent of rare earth minerals, produce 90 percent of magnets and 80 percent of batteries, and control at least 75 percent of the global market for 30 of the 54 minerals designated as essential to national security by the U.S. Geological Survey in its 2025 Critical Mineral List.
The Geological Survey has warned that the United States is 100 percent import-reliant for 12 of those minerals and more than 50 percent reliant for 29 others. Senate Armed Services Committee Chair Roger Wicker said that vulnerability creates leverage China could exploit.
Since April 2025, Beijing has imposed export restrictions on 12 rare earth elements. In October, China’s Ministry of Commerce restricted exports of holmium, erbium, thulium, europium, and ytterbium—materials used in nuclear reactors, lasers, and fiber optics—though those limits were suspended for a year pending trade talks with Donald Trump.
“Had the CCP imposed export restrictions, it could have brought us to our knees,” Wicker said. “How did we get to this point?”
Cadenazzi said the issue stems not from geology but from policy and economics. “For decades, a combination of burdensome and under-resourced permitting processes, unfair competition from state-subsidized foreign entities, and a lack of sustained investment has hollowed out our domestic industrial base. We are now systematically rebuilding it.”
He acknowledged the effort will be costly and lengthy. “We’re engaged in a long-term competition with our primary strategic competitor in China. There will be setbacks along the way. Our adversaries will not stand idly by.”
Four-Pillar Strategy
Cadenazzi, joined by acting Deputy Assistant Secretary of Defense for Industrial Base Resilience Jeffrey Frankston, outlined what he described as four mutually reinforcing pillars guiding the department’s strategy.
The first pillar focuses on revitalizing domestic production capabilities through tools such as the Defense Production Act, the Industrial Base Analysis and Sustainment program, and the Office of Strategic Capital. These authorities have enabled $1 billion in direct equity investments, with another $12 billion potentially available in the coming years. Investments target materials ranging from antimony and tungsten to manganese and beryllium.
The second pillar emphasizes strengthening alliances through what officials call “friend-shoring.” Australia and Canada were cited as key partners, with Australia holding significant deposits of rare earths, lithium, and cobalt, and Canada rich in nickel, potash, uranium, and cobalt. Japan and South Korea were identified as important downstream manufacturing partners.
The third pillar involves innovation, including developing substitute materials and expanding recycling capacity. Cadenazzi pointed to a $4.2 million grant to a Nebraska company extracting terbium oxide—a rare earth element used in magnets—from recycled fluorescent light bulbs.
The fourth pillar centers on modernizing the National Defense Stockpile. Frankston said the program requires “a fundamental reimagining” to become a more dynamic tool for 21st-century national security.
“This is a direct opportunity for our country to build a resilient capability,” Frankston said.
Debate Over Equity Stakes
Wicker, who has served on the committee since 2008, said there is bipartisan support for rebuilding the critical minerals supply chain but acknowledged concerns over the administration’s decision to take equity stakes in private firms.
As of Feb. 24, the administration has invested $1 billion in private companies and directed $12 billion toward stockpile initiatives. Taxpayers now hold a 15 percent stake in MP Materials, purchased for $400 million; 10 percent of USA Rare Earth; 5 percent of Lithium Americas; 40 percent of a Korea Zinc smelter project in Tennessee; and 10 percent of Trilogy Metals.
Cadenazzi defended the strategy, calling equity investments a catalyst for private capital and a necessary correction to what he described as a failed market-based approach that left the United States dependent on China.
“Things that have been done in the past led to dependence on China,” he said. “We believe that, given the frailty of many of our minerals markets, that equity is a necessary component to drive alignment of the companies and make a clear commitment from government.”
However, Sen. Jack Reed questioned whether federal ownership stakes risk distorting markets. He said government investment in select firms could create an uneven playing field and potentially mirror China’s state-backed industrial model.
Reed warned that China could undercut U.S. efforts by flooding markets and driving down prices to weaken American-backed ventures.
Cadenazzi countered that federal seed funding would stimulate demand and encourage additional private investment. He urged Congress to support a more aggressive model, including offtake agreements and price floors, to protect domestic producers from market manipulation.
“We think we’ve successfully created the mechanism to generate more transparent and market-based pricing that’s to everyone’s benefit,” he said.
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