Highlights

• The US federal government announced a nearly $1 billion investment in domestic critical minerals projects.
• Purpose: Enhance energy and defense capabilities.
• Funding targets key sectors including:
  • Rare earth elements
  • Battery materials
  • Semiconductor inputs
• Covers stages: Mining, processing, and manufacturing.
• Aims to:
  • Reduce reliance on foreign suppliers, particularly China
  • Create a resilient, home-grown supply network for strategic materials

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The U.S. federal government has announced plans to invest nearly $1 billion in domestic critical minerals projects, aiming to accelerate the development of materials vital for clean energy and national defense. Cited (opens in a new tab) via the Department of Energy (opens in a new tab) (DOE),  this broad funding initiative is meant to expand U.S. mining, processing, and manufacturing of critical minerals – used in everything from electric vehicle batteries to semiconductors – in sectors currently dominated by China.

According to Energy Secretary Chris Wright (opens in a new tab) “For too long, the United States has relied on foreign actors to supply and process the critical materials that are essential to modern life and our national security”.  He highlighted the urgency of reshoring these supply chains. The move is aligned with President Donald Trump’s executive order on maximizing American energy development, reflecting a top-level push to secure the minerals and materials underpinning high-tech industries.

Recent Developments

This major U.S. investment comes amid a flurry of critical minerals initiatives globally. Yesterday (Aug. 12), Australia’s Arafura Rare Earths announced a potential funding boost of around $100 million from Export Finance Australia – part of a broader Western effort to develop rare earth supply chains with international partners outside of China. Today (Aug. 13), the U.S. DOE formally declared its intent to issue funding opportunities totaling nearly $1 billion for domestic projects across key stages of the critical minerals supply chain. Together, these developments signal a coordinated push among allied nations to reduce reliance on Chinese sources for critical materials and to build resilient, home-grown supply networks.

Funding Breakdown and Scope of U.S. Initiative

According to the DOE’s statement and Reuters reports, the nearly $1 billion will be distributed through several programs targeting different points in the supply chain. The funding will be delivered as competitive grants or financial assistance via Notices of Funding Opportunity (NOFOs) in late 2025 and beyond, encouraging industry and academic partnerships to advance new technologies. Key allocations include:

$500 million

Expand U.S. critical mineral processing capacity and scale up battery materials manufacturing and recycling, supporting minerals like lithium, nickel, graphite, cobalt, and other battery inputs. This large grant program will fund demonstration or commercial-scale facilities to process and recycle battery-critical minerals, with a 50% cost-share required from industry partners.

$135 million

Establish a Rare Earth Elements Demonstration Facility to strengthen the domestic rare-earth supply chain. This program will demonstrate the commercial viability of extracting and refining rare earth elements (REEs) from mine tailings and waste streams, reducing U.S. dependence on foreign REE processing. Projects under this category must include an academic research partner and at least 50% private cost-sharing, underscoring the public-private approach to innovation.

$250 million

Fund pilot projects at industrial facilities (including coal plants) to recover critical mineral byproducts from existing waste and process streams. This “Mines & Metals Capacity Expansion” effort, led by DOE’s Office of Fossil Energy and Carbon Management, seeks to de-risk technologies that extract valuable minerals from coal ash, mine waste, and other industrial residues. By proving these techniques at scale, the program aims to turn environmental liabilities into domestic resource opportunities.

$50 million

Support the Critical Minerals & Materials Accelerator focusing on advanced processing in the rare-earth magnet and semiconductor material supply chains. This includes funding for refining and alloying of critical high-tech materials such as gallium, gallium nitride, germanium, and silicon carbide – elements used in semiconductors and specialty magnets. It will also back cost-competitive technologies for direct lithium extraction and critical-material co-production from recyclables, spurring commercialization of next-generation processes.

$40 million

(via ARPA-E) Advance novel methods to recover critical minerals from industrial wastewater and brine streams. This smaller program, named RECOVER, targets unconventional sources of minerals (like lithium, cobalt, and rare earths) found in wastewater. Slated to announce project selections in fall 2025, it complements more traditional mining by tapping resources that would otherwise go to waste.

Timeline:

The DOE indicated these funding opportunities will be rolled out in late 2025 (early fall for some programs) and into 2026. Companies, research institutions, and state or tribal entities will be eligible to apply ,with awards likely requiring substantial matching investments. By structuring many projects as public-private partnerships, the government aims to rapidly scale up domestic capacity while sharing the financial risk with industry stakeholders.

Focus on Rare Earths, Battery Materials, and Semiconductors

The scope of the investment highlights strategic materials critical to clean energy, electronics, and defense. Rare earth elements (like neodymium, dysprosium, and others) are a core focus – essential for powerful magnets used in EV motors, wind turbines, and military hardware.

The plan’s dedicated rare-earth programs (the $135 M REEdemo facility and $50 M magnet supply chain funding) will address bottlenecks in refining and magnet production, areas where the U.S. has virtually no current capacity and relies heavily on China. By demonstrating new refining methods on U.S. soil and scaling up magnet alloy production, officials hope to revive the domestic rare earth industry and ensure a stable supply for manufacturers.

Another priority is battery materials: lithium, nickel, cobalt, graphite, manganese, and even aluminum and copper (used in battery cells and electric wiring). Funding for battery material processing and recycling (the $500 M program) is expected to boost projects like lithium refining, cathode active material production, and battery recycling facilities in the U.S.. This not only supports the fast-growing electric vehicle sector but also reduces hazardous waste by encouraging the recycling of used batteries. “The proposed funding opportunity supports… processing, recycling, or manufacturing critical materials which may include traditional battery minerals such as lithium, graphite, nickel, copper, aluminum, as well as other minerals contained in batteries, such as rare earth elements,” the DOE noted in its announcement. In practice, this could mean new refineries for battery-grade lithium chemicals, plants to produce EV battery cathodes, and expanded recycling operations that recover lithium and rare earths from spent electronics.

The inclusion of gallium, germanium, and silicon carbide in the funding scope is also notable. These are key ingredients for semiconductors and advanced electronics (for example, gallium nitride and silicon carbide are critical for next-gen power chips and radar systems). China recently curbed exports of gallium and germanium, which sent shockwaves through tech supply chains. By investing in domestic processing of these materials, the U.S. aims to mitigate supply shocks and foster a homegrown source for semiconductor manufacturers.

Additionally, innovative projects like ARPA-E's RECOVER target non-traditional sources of minerals – for instance, extracting lithium, rare earths, or other metals from geothermal brines or wastewater at power plants. Such technologies, if successful, could supply significant quantities of critical minerals with minimal new mining, turning industrial waste into a resource. Overall, the funded programs span the entire value chain: from upstream mining and waste recovery, to midstream processing and refining, to downstream manufacturing (like battery assembly and magnet fabrication). This comprehensive approach is designed to build an end-to-end domestic supply chain for critical minerals and materials.

Government Programs and Leadership Involved

Multiple government offices and programs are coordinating in this effort, reflecting a whole-of-government strategy to secure critical minerals. The Department of Energy is at the forefront, specifically DOE's Office of Manufacturing and Energy Supply Chains (MESC) – which will administer the largest grants for battery material processing and rare earth supply chain projects– and the Office of Fossil Energy & Carbon Management, which oversees the industrial byproduct recovery program. The DOE’s Advanced Materials and Manufacturing Technologies Office and ARPA-E are also key players for the specialized $50 M Accelerator and the $40 M RECOVER program, respectively. Energy Secretary Chris Wright has positioned the department as a driving force behind reshoring these capabilities, stating that under President Trump’s leadership, the DOE will “play a leading role in reshoring the processing of critical materials and expanding our domestic supply of these indispensable resources.”

Crucially, this initiative aligns with the Trump Administration’s broader critical minerals agenda. It is being rolled out in accordance with President Trump’s Executive Order“Unleashing American Energy”, which prioritizes domestic resource development and energy security. Earlier this year, in March, President Trump invoked the Defense Production Act (DPA) to accelerate processing of critical minerals, providing the Pentagon additional authority to fund strategic projects. The Department of Defense has indeed been active on a parallel track. As of mid-2025, the Pentagon has invested roughly $540 million into U.S. critical mineral and rare earth projects and signaled it “will continue such efforts in accordance with congressional appropriations and statutory authorities,” according to a defense official. This includes a landmark deal making DOD the largest shareholder in MP Materials – America’s lone rare-earth mining company – as well as funding agreements to “share the risk” with private sector companies for establishing domestic magnet production.

Other agencies are contributing as well. The U.S. Department of the Interior recently moved to streamline regulations and direct funding toward extracting critical minerals from mine waste and abandoned mine lands. And the U.S. Geological Survey (USGS) is mapping mineral resources in mine tailings nationwide. Meanwhile, federal tax incentives from a July 4 spending bill are set to encourage new critical mineral facilities and processing plants. In Congress, bipartisan support has grown for policies to reduce import dependence for lithium, rare earths, and other strategic materials (including proposals for stockpiling and R&D funding). Rare Earth Exchanges and other industry stakeholders are closely monitoring these government initiatives, as they collectively form an emerging policy framework to rebuild the U.S. industrial base for critical minerals.

Domestic Supply Chain Security vs. International Dynamics

This $1 billion investment is expected to significantly impact domestic vs. international supply chain dynamics for critical minerals. By bolstering local production and processing, the U.S. is directly addressing its vulnerability in relying on imports – especially from China, which has long been the world’s dominant supplier of rare earth elements and many battery materials. Currently, China controls an outsized share of mining and refining for materials like rare earths (over 60% of global production and 85–90% of processing), as well as a large portion of the lithium-ion battery supply chain components. U.S. officials have described this dependence as a strategic risk: foreign supply disruptions or export restrictions (as seen with China’s recent curbs on gallium/germanium) could cripple industries from electronics to renewable energy. The planned funding is therefore aimed at reducing that risk by creating a stable domestic pipeline for these resources. If successful, the U.S. and its partners would no longer be “relying on foreign actors” for critical materials, noted Secretary Wright, thereby strengthening national security and economic independence.

On the other hand, building up domestic capacity will take time, and the rest of the world isn’t standing still. The U.S. investment is part of a larger realignment of critical mineral supply chains among allied nations. For example, Australia, Canada, and European countries are launching their own funding programs and partnerships to develop new mines and refineries outside of China’s sphere. Australia’s support for Arafura’s rare earth project – along with an AU$840 million commitment by its government to build the Nolans rare earth mine/refinery – is one such case. Similarly, Europe has created the European Raw Materials Alliance to invest in rare earth processing, and Canada has earmarked substantial funds for critical minerals in its budget. The U.S. government has indicated it will collaborate with these allies on offtake agreements and technology sharing to ensure secure and diversified global supplies of critical minerals.

Another international dimension is the competitive response: China may react to these developments by adjusting its own export policies or prices. Notably, China recently imposed export licenses on gallium and germanium (materials targeted by the U.S. funding), which reinforced to U.S. policymakers the urgency of developing alternative sources. In the long term, if U.S. and allied investments succeed, we could see a more multipolar supply chain where Chinese dominance is reduced and critical minerals are sourced from a combination of domestic mines, recycling, friendly nations, and innovative extraction from wastes. This would enhance supply chain resilience against geopolitical shocks and trade disputes. However, industry experts caution that “rebuilding the critical minerals and rare earth magnet sectors of the U.S. industrial base won’t happen overnight,” even with significant funding. Projects must navigate permitting, technical scale-up, and market competition.

In summary, the U.S. federal commitment of nearly $1 billion marks a historic investment in critical minerals and materials. It targets essential sectors – rare earth magnets, battery metals, and semiconductor inputs – with the goal of catalyzing a domestic renaissance in mineral production and processing. Alongside parallel efforts by the Defense Department and international partners, this initiative could reshape supply chains that have been vulnerable for decades.

Rare Earth Exchanges will continue to monitor the rollout of these funding programs and their impacts on the rare earth and critical mineral markets. If executed as planned, the U.S. and its allies may soon take major steps toward securing the raw materials of the future, reducing dependence on foreign sources while spurring innovation and economic growth at home. This coordinated push underscores the new geopolitics of critical minerals – where supply chain security is paramount, and investment todayis poised to pay dividends in technological and industrial leadershipfor years to come.

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