The Trump administration is weighing the reallocation of at least $2bn from the CHIPS Act to support critical minerals projects, reported Reuters, citing sources.
The move will potentially enhance the influence of Commerce Secretary Howard Lutnick in this sector.
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This proposed shift would utilise funds initially designated for semiconductor research and chip factory construction, aiming to decrease US reliance on China for critical minerals essential in electronics and defence.
Since assuming office in January, President Trump has criticised the CHIPS Act, describing it as “a horrible, horrible thing” and has sought to renegotiate grants to chipmakers.
Redirecting some funds to mining-related projects could be seen as aligning with the CHIPS Act’s objectives, given the semiconductor industry’s need for minerals like germanium and gallium, which are currently dominated by China.
“The administration is creatively trying to find ways to fund the critical minerals sector,” a source privy to the matter was quoted as saying.
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By GlobalDataDiscussions on the plans are ongoing and subject to change. The move could benefit not only mining companies but also those involved in processing and recycling, as most critical minerals are not processed in the US.
Lithium manufacturer Albemarle’s CEO, Kent Masters, had mentioned to the news agency that the company’s US lithium refinery construction plans remain unclear without some sort of government support or partnership.
However, Lutnick is eager to “get the $2bn out the door” promptly and is looking for additional funds to reallocate soon.
A former US official noted that the Biden administration had considered using CHIPS Act grants for rare earths but found it uneconomical and best managed by the Department of Energy (DoE).
Meanwhile, the Trump administration is also contemplating using CHIPS Act funds to take equity stakes in companies like Intel in return for cash grants.
President Trump has prioritised expanding US critical minerals production, signing executive orders to encourage deep-sea and domestic mining.
His recent meetings with Rio Tinto and BHP CEOs at the White House, despite ongoing negotiations over Ukraine, highlight his commitment to US mining.
The DoE has proposed $1bn for critical minerals projects tied to the 2021 Bipartisan Infrastructure Law.
The White House plans to give Lutnick a greater role in funding decisions for critical minerals, overseeing the process within the administration, the Reuters report said.
Furthermore, the Pentagon’s investment in MP Materials and its price support mechanism extension, negotiated by Deputy Defense Secretary Steve Feinberg, was seen as uncoordinated by White House Chief of Staff Susie Wiles.
This prompted clarification that MP Materials would not monopolise rare earths. Funding for MP’s deal still requires Congressional allocation.
Following the Pentagon’s announcement of its investment in MP, administration officials convened with rare earths companies to demonstrate support for the sector.
Lutnick will now coordinate funding decisions, taking the lead from the Pentagon and other agencies. Before joining Trump’s cabinet, Lutnick led Cantor Fitzgerald, a significant shareholder in Critical Metals, which is under consideration for a loan from the US Export-Import Bank.
