S2 E88: America’s Entire Critical Minerals Stockpile Is Worth $600 Million | Ashley Zumwalt-Forbes

Dustin Olsen (00:01)
Hi Ashley, welcome to the show. How are you doing?

Ashley Zumwalt-Forbes (00:04)
Hey, I'm doing great. Thanks so much for having me.

Dustin Olsen (00:07)
Ashley, as we were just chatting before the show started, you have quite the background and experience in this industry, and we're excited to unpack that. You've worked in corporate, you've worked with the government, and now you're a fellow at Rice University — so now you're in education. I'd love to unpack all of that. I hope you're ready.

Ashley Zumwalt-Forbes (00:35)
I'm ready, I'm ready. I always joke that I wear many hats, and the Venn diagram of what I do is kind of the weird and the wonderful. So buckle up — very excited to chat.

Dustin Olsen (00:54)
Perfect. So to start, I wanted to ask about the time you spent working with the Department of Energy on critical minerals and helping companies get backing. What did that job actually look like, and how did you decide who gets a check?

Ashley Zumwalt-Forbes (01:17)
Great question — it's a very defined process. I was a Fed, not a political appointee; that's important, I'll circle back to it. I came in as an SES, the deputy director for Batteries and Critical Materials within the Department of Energy, and I was effectively brought in to help make commercial investment decisions tied to the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act. Under BIL, I was responsible for sections 40207 and 40205, colloquially known as the battery grants and the rare earth demonstration grants — collectively just over $6 billion of non-dilutive equity. Under IRA, I also had 48C, the investment tax credit, worth about $10 billion. I did 30D too, which died in the One Big Beautiful Bill — the others mostly survived, so I just pretend 30D never happened. It was all a dream. You asked a fantastic question — pull back the curtain, how do you make the choices? Frankly, it's not overly exciting. The acronyms have changed, but it's still a similar process for grants. We'd release a request for proposals tied to a specific bucket of capital coming from Congress, and outline exactly what we were looking for across a few topic areas — those could be broad, like innovative anode materials, or specific, like new processing methods for lithium. Companies submit under their topic area, first a short overview of their company, capabilities, and funding status, and the team reviews those initial proposals against the published rubric. The first step is a big bite — you want to significantly cut down the number of full submissions, both to save your own bandwidth and the companies', because putting together a full government grant proposal is an enormous, expensive lift. If you don't think a company has a great shot based on the rubric, you tell them so — though they can still submit a full application if they want to. The full applications come back, and again it goes to the rubric — it's not one person in a vacuum. For each independent criterion, there are multiple specific reviewers who read the proposals and recommend scores. All of that goes into a database, and there's a selection committee — I sat on it. You see all the expert scores per item within the rubric, plus their comments. You have latitude to change a score, but it has to be documented why — maybe what the reviewer missed. It's really a process to ensure you're not picking favorites or choosing winners; you're upholding a rigorous process. We'd narrow it down and bring folks in for interviews — mostly they physically came to DC — and from there, decisions were made and fully announced. It's a time-intensive process for everyone, the companies and the staff working it, but it stands up to scrutiny and allows these transactions to be arm's-length, which matters a lot when you're dealing with non-dilutive equity — grants — because the taxpayer isn't necessarily getting a direct return. You're stimulating jobs, stimulating the economy, building supply chains — but it's not a direct "I give you money, you give me shares or pay me back in debt" transaction.

Daniel O'Connor (07:47)
Fascinating — I think you have a very unique background, coming from the engineering side, I believe, and petroleum, and then building significant experience in finance, which keeps getting more complicated. As you look at the race to reindustrialize these critical mineral and rare earth supply chains, Ashley — we track this a lot — we have a significant adversary: a highly organized, synchronized, vertically integrated yet dispersed and federated competitor called the People's Republic of China. They have the Chinese Treasury behind them and the Communist Party orchestrating strategy across it. So we have to find our own way, and critical to that is capital. Yet you have all these different pools of capital — private equity, public markets, grants, loans. Can you talk, at least at a generic level, about what problem we're running into? What are the generic scenarios that make projects run into trouble?

Ashley Zumwalt-Forbes (09:23)
Yes, absolutely — there is one, and it's the ability to make money. Look at projects on a unit-economics basis: it's extremely challenging across the supply chain to make money, and here's why. As you outlined, China has a significant monopoly across these niche supply chains at every juncture — upstream, midstream processing, and downstream use case, meaning putting that processed material into the actual widgets sold onward. They benefit from vertical integration — passing a ton of metal from the mine all the way through the supply chain at cost, without transfer pricing or margin stacking entering into it — and at the end of the supply chain, they don't actually have to make money. In the West, we as investors and managers are held accountable to quarterly returns and a fiduciary responsibility to maximize returns for our investors, against the backdrop of a monopoly that doesn't need to make money on a quarterly basis — that views this more as a decades-long, almost militaristic capacity-building exercise. You very quickly find out it's near impossible to start building supply chains. These are very nascent industries in the West — and when I say "we," I mean the collective world, minus China, Russia, North Korea, and Iran, the big four foreign entities of concern. We really allowed those capabilities to be outsourced — the Clean Air and Clean Water Acts in the '90s, we were happy to see more polluting industries go elsewhere and refocus our economy on other activities. I try not to be a Monday-morning quarterback about it, and I'm definitely not the smartest person in the world — but with hindsight, we can see we're at a disadvantaged position because we can't supply our own defense industrial base.

Daniel O'Connor (13:20)
Global, global bliss.

Ashley Zumwalt-Forbes (13:25)
Exactly — it felt like we were in a forever, globally tradable society. And we're not. So the reason it's so challenging: we don't have capacity today, China has a monopoly and doesn't need to make money, and anytime you're standing up original capacity it's more expensive because you don't have the volume to amortize CapEx across, plus higher commissioning OpEx. The last issue — and it all comes back to making money — is that the more niche the commodity, the higher the specific risk. These small markets are priced off reference prices that come out of China, done on bilateral contracts. It's not like copper, where you look up the price and there it is, globally tradable with deep volume. Because China controls spot price, if the West scales capacity — think back to the Molycorp days — the CCP, wanting to consolidate control, simply floods the market with volume, drives price down to where unit economics go negative, and all the Western business goes bankrupt. That's the exact Molycorp story, and it has happened over and over. Financiers have learned from that, and they're rightfully very nervous to make investment decisions around critical minerals.

Daniel O'Connor (15:23)
You're hitting the nail on the head — that's the situation. Now, we've said we're in a new era of globalization, what we call Great Powers Era 2.0, and that critical mineral and rare earth supply chains are key to national security. So: is it possible that accounting will change so the resilience that's needed gets factored into the system, so there's more buffer to get paid? We hear some people talk about that, yet we also hear auto companies and their suppliers say they don't care — they just want the cheapest price and will go back to China. Can you talk about the accounting side?

Ashley Zumwalt-Forbes (16:33)
Current requirements are to report financials quarterly — there's a proposal to maybe move that to half-yearly, but it doesn't really matter much either way. I think boards being able to think long-term, not just maximize for quarters or halves, is great — because sometimes, like with the AI data-center buildout, you need to invest large sums of capital before you see returns. We see it in the market with hyperscalers investing enormous amounts, and there are no guarantees. So investors get nervous; if it's purely driven quarterly, stock prices move and there's volatility, and reporting half-yearly doesn't really change that. The flip side: let's say we wanted companies to think long-term and moved to five-year reporting. The issue is investor protection — in a perfect world where everyone acted rationally and morally, maybe that could work, but that's not the world we live in, and we can't loosen restrictions that far. So reporting frequency alone probably doesn't materially change much, though half-years would at least decrease the reporting burden, which is expensive, especially for small public companies. What about just making people pay higher prices for non-adversarial material? When I was in government, there was a lot of "please buy American" — but American material is more expensive, and no matter how nicely you ask, if there's no requirement to buy the more expensive material, they're not going to. And that's not irrational on their part — they have a fiduciary responsibility to their shareholders to maximize returns, so buying the lowest-cost input to maximize margin is the rational decision. Then you look at it from a government or citizen perspective and say, "but national security" — and unfortunately, national security is an unpriced externality; the market doesn't pay for it. That's the flex point: we're effectively asking private industry to underwrite secondary supply chains at their investors' expense, without changing anything, and it won't happen. That's why I've been enthusiastically excited to see new investment structures coming out of the US government — some haven't been perfect, but we're all learning; there's no perfect answer for these markets. I'm particularly interested in things like price floors, because an investor can underwrite a worst-case scenario against that — though those aren't scalable across entire industries. I think what has to change is national security effectively becoming a mandated premium.

Daniel O'Connor (21:56)
That's a good opening for the United States Critical Minerals Investment Corp, and you're also involved with an acquisition corporation directing investment. Generically — say someone comes to you with a project where the math isn't quite working but they have what we need — how do you think about bringing the different financing pieces together, say, under M Evo Global Acquisition Corp II?

Ashley Zumwalt-Forbes (22:38)
Disclaimer for all of this: M Evo Global Acquisition Corp II is a public company, a SPAC — a special purpose acquisition company — $300 million, listed on NASDAQ. Its purpose is to merge with or buy a company that becomes a new public company. I had a SPAC before, called Metals Acquisition Corp; we bought an operating copper mine from Glencore. I can't comment on how MEVO specifically thinks about investments or what it may or may not buy — so let me talk generally, just Ashley out in the world. I have a family office called Smoketree Resources — that's me investing off my personal balance sheet, and a lot of these opportunities cross my desk. You really have to think of these investments as structures, not straight equity investments — if you're buying stock, that's a straight trade. For niche materials, just putting an equity check into a company won't do much — maybe it gets them a little further down the engineering pathway, or pays some G&A. This isn't a sector-wide statement; there are absolutely groups making money at current prices — but generally, you have to figure out how to underwrite the investment so it makes sense. The first lever — even outside critical minerals — that private equity or management groups generally use to juice returns is debt: putting debt on an acquisition decreases the equity invested and increases equity returns, because you're making the same money on a smaller equity base. But what if there are no returns? You put debt on it, you're losing money on every widget, and you can't even service the debt — all the normal rules get thrown out the window. It comes down to how your offtake agreements look. Sometimes you'll see offtake agreements that are cost-plus — instead of a Chinese reference price, the buyer pays your agreed-upon cost plus a specific margin per widget. That's potentially something you can underwrite, because you know the floor. In larger commodities, investors can hedge to ensure a floor if prices move; in these less-liquid markets, no such instrument exists — so it comes down to your offtake: cost-plus, or a floor. A floor could come via an offtake agreement where a commercial group really wants the material — usually mandated in some way, not out of goodwill — or a government component, which could be a floor price, or some of what's being discussed now around Section 232 import tariffs or synchronized import pricing. But you have to be able to fix the price of the good so you can actually make money, or you're just lighting money on fire in a trash can.

Daniel O'Connor (28:21)
You're making fascinating points — if you don't know what you're doing early on with any of these assets, you're in deep trouble. It's like a jigsaw puzzle: depending on context, you're looking at different cash sources and how you structure them, and you need certain conditions in place to maximize that structure. So it sounds like the earlier someone like you is involved, even in a consultative role, educating people on the choices and risks, the better. Would you agree?

Ashley Zumwalt-Forbes (29:16)
The last thing I want is for people to say "mining, I'm just going to lose money there" and go trade meme coins instead — please don't take that away from this conversation. But you are correct that buyer beware applies — and not just to mining, that's true across the board. You need to understand the fundamentals of the business you're investing in before you invest: do your research, understand where the company sits relative to others, understand the reputation of the management team and the board — are they known for strong execution, or are they more promoters? Buyer beware isn't just mining, or just critical minerals — I'd say it's everything.

Daniel O'Connor (30:39)
It's everything, right. This is a fascinating conversation, because one theme we keep hitting is that investors in North America need to be more aware of this space. We've been told America tends to have thematic investors, different from Australia, and we think that needs to change because this is a national security matter — we need private capital, but also people like you who know how to bring together government sources, debt, and equity. Investor education has to be part of that. Where are we at with investor education in the US around mining, minerals, and metals?

Ashley Zumwalt-Forbes (31:39)
Over the last two to three years, it's hard to open any news source and not see critical minerals or rare earths mentioned — so on awareness, we've come a long way; people at least know these are issues that need addressing. On broader education, I'd frame it differently: generally there are specialist funds that invest in specific industries, and mining has them too, but they're few and far between, because a lot of them torched a lot of capital historically, and it's been hard to raise new funds — it's a hard business. So I'd argue it's impractical to expect every retail investor to have a deep fundamental understanding of exactly how these markets work. What I'd like to see is both larger and more institutional investors getting involved and deploying capital in the space — and then retail investors can take cues from institutional investors who publish research, coverage, and pricing recommendations. It's a matter of thinking a little outside the box: historically, US public markets haven't been large mining markets — even US-domiciled companies list on the TSX or ASX because investors there just get the mining thesis better, and there's more institutional capital with an earlier-stage, almost venture-fund risk appetite, so you can raise exploration funding. US public markets skew toward more mature-stage companies. There's a fundamental difference — but it's unrealistic to expect retail investors to be experts at everything. I'm certainly not, and I don't expect others to be either.

Dustin Olsen (35:27)
On this theme of funding and investing — you've said no private investor can finance a billion-dollar project alone, because China could come in, drop the price, and undercut the competition to the point of maximum vulnerability. What are your thoughts on how we combat that?

Ashley Zumwalt-Forbes (36:05)
You have to let investors get comfortable with what the downside is — you need to cap it. You could do that with a price floor, but I think that's unrealistic to scale across industries against a government balance sheet. I've published a series of papers through Baker Institute at Rice — the most recent came out today, coincidentally — four papers on how a market like this could work and attract capital. The basic premise is to bifurcate volumes of material between adversarial-controlled and non-adversarial-controlled material, and develop a separate reference price against which the non-adversarial material trades. It would be exceptionally complex to implement, and I'm not recommending it for all 60 critical minerals — but for a basket of materials, think the ones China has placed export bans on, we do need that separate reference price for investors to get comfortable and underwrite projects. You have to take some risk out of the equation, or the checks won't get written.

Dustin Olsen (38:03)
Tough problem to overcome — hopefully at Rare Earth Exchanges we can help with the education to encourage investors in the right direction.

Ashley Zumwalt-Forbes (38:13)
Yes, absolutely.

Daniel O'Connor (38:16)
Ashley, we have a lot of very interesting people approaching us now — large entities from all over the world — so it's quite interesting, and I'm convinced that the intersection of these different financial streams, and people like you who understand the underlying businesses and business models, can really help architect a pathway to resilience. We have no choice, right? Let's look at a bleaker scenario — what happens if we don't creatively find our way out of this? What does that look like in another three, four, five years?

Ashley Zumwalt-Forbes (39:18)
We have stockpiling efforts — the Department of War has specific stockpiles of strategic materials. In early 2025, on public information, those were worth about $600 million in total. Not a lot, though additional funding has since been appropriated to buy more, so the value has grown. There's also the $10 billion Project Vault. There have also been very real efforts to scale a magnet supply chain specifically in the West — hats off, it's a very hard job; the IP is challenging, and it's not just the IP, it's the trade craft of actually doing it, almost an art. All credit to the folks trying and doing it. So we might be better positioned in the magnet space — but the reality is, God forbid a global conflict broke out, we do not have the ability to supply our defense industrial base. There are 60 critical minerals, with a real range of criticality across them, but they're critical. If you can't supply your defense industrial base, you very quickly find yourself in a situation where you're going to lose. I find it a very scary situation — the more you understand our lack of capability, the scarier it is. I really believe in American ingenuity, and I'm extremely patriotic, and I believe we'll find a way out of this — but it's going to be hard. It's an exceptionally challenging problem. Your stockpiles get you to a place, and then — question mark.

Daniel O'Connor (42:31)
Yes — one reason we started this platform last year is exactly that criticality, and the fact that you have this gift of varied experience and expertise. It's critical that people like you are talking to individuals and projects and helping maximize the probability of success. One takeaway from this conversation: projects need to be thinking about integrated, holistic finance sources and structures very early on, because that shapes what kind of deals they can even consider. It's fascinating.

Ashley Zumwalt-Forbes (43:24)
The wild west. It really is. Yup.

Daniel O'Connor (43:29)
Dustin, any final thoughts?

Dustin Olsen (43:32)
My final thought is that this has been a truly fascinating conversation. I think we've only begun to scratch the surface of what this looks like from an investor perspective — what to look at, what to be cautious of, all while staying motivated to invest and move it forward. There's a lot here, and I hope our audience takes it seriously and approaches it in the way they feel is best.

Daniel O'Connor (44:08)
If the audience and folks on our website want to know more about Ashley's work, how do they find you?

Ashley Zumwalt-Forbes (44:20)
I'm an extremely prolific LinkedIn poster, which is one of the most embarrassing things a person can be — but my opinions need to go somewhere, and my head will explode if I don't get them out. I'm the only Ashley Zumwalt-Forbes, so if you look me up, I'll be there, and you'll get a ton of unsolicited opinions, usually about critical minerals, with a few random subjects thrown in. I'm usually pretty responsive, depending what's going on. I'm not an influencer in any way, but come on by — give me a follow.

Daniel O'Connor (45:32)
That's awesome — we've actually run into some of your work already and studied some of what you've written, so it's very impressive. I think you're a very brilliant person, and a patriot.

Ashley Zumwalt-Forbes (45:49)
And a patriot, yes, yes.

Daniel O'Connor (45:59)
I think that "global bliss" — we got into a certain groove, and now we just need to work our way into another paradigm. I think we're on our way.

Ashley Zumwalt-Forbes (46:10)
Yep. I'll leave you with an anecdote I actually find comforting: I'm not related to the late Admiral Zumwalt. Everyone always assumes I am, and I get a lot of credit I don't deserve — zero relation. But because I'm often asked about him, I've read what he and his son wrote, as well as books written about him. There's a really interesting piece where Admiral Zumwalt talked about how, during much of the Cold War, we were losing — it really felt like we weren't going to come out on top, that we were behind technologically. Ultimately we did come out successful, but it was by no means a foregone conclusion — it was fork-and-knifing our way through the entire time. I'd certainly love to be part of the solution for getting America, and the West broadly, through the trenches here — to be on the good side of this, and to believe this is a replication of the Cold War. It's bleak when you look around today, but you cannot lose hope — you've got to fight on, keep getting out there, and keep finding solutions.

Daniel O'Connor (48:27)
Amen to that. We're with you, and we'll try to help find ways to work together — thank you so much, we're honored to have had you.

Ashley Zumwalt-Forbes (48:37)
No problem at all — thanks, guys, this was really fun. Have a great rest of your week, and thanks to all the listeners out there.

Daniel O'Connor (48:47)
Thank you.

Dustin Olsen (48:47)
Thank you, Ashley.