Pentagon to keep investing in US critical minerals projects, defense official says

Reuters

15-07-2025

July 15 (Reuters) - The U.S. Department of Defense plans to continue investing in critical minerals projects to ensure a diverse American supply of the building blocks for weapons and many electronics, a defense official told Reuters on Tuesday.
The Pentagon signed a multibillion-dollar deal last week to become the largest shareholder in rare earths producer MP Materials (MP.N), opens new tab and also agreed to several financial backstop measures for the company.
The move - which the defense official said reflected a desire to "share the risk" inherent in minerals projects - sparked questions across the mining sector about whether other companies could see similar investments from the U.S. military.
The Pentagon has invested almost $540 million into critical minerals projects and "will continue such efforts in accordance with congressional appropriations and statutory authorities," the official said.
"Rebuilding the critical minerals and rare earth magnet sectors of the U.S. industrial base won't happen overnight, but (the Pentagon) is taking immediate action to streamline processes and identify opportunities to strengthen critical minerals production," the official added.
The U.S. government and military recognize that the country no longer can produce or process many critical minerals, but plans to "take the necessary time and precautions to produce critical minerals and associated products in a safe and responsible fashion," the official said, adding that approach was unlike China's.
Chinese mining standards are considered to be lower than those in the United States.
The MP deal structure reflects a "unique approach" by the U.S. government to "account for the difficulties in establishing and sustaining production of critical rare earth magnets in a market environment in which China controls much of the supply chain," the official said.
The Pentagon investment in MP was undertaken via a Cold War-era law known as the Defense Production Act, as well as its Office of Strategic Capital, the official said.