CSIS - Center for Strategic and International Studies Inc.
02/26/2026 | Press release | Distributed by Public on 02/26/2026 16:56
Industrial Policy Is Back—And Minerals Are at the Center
Industrial Policy Is Back-And Minerals Are at the Center
Photo: Joe Buglewicz/Bloomberg/Getty Images
Critical Questions by Gracelin Baskaran and Meredith Schwartz
Published February 26, 2026
Throughout the twentieth century, the United States deployed bold and creative industrial policies to secure critical minerals during crises. Today, it has fully revived that playbook-using equity stakes, price floors, foreign sourcing agreements, public procurement, and strategic stockpiling to develop mineral markets and bolster security actively. This renewed intervention is particularly significant because, for many key commodities, mining and processing capacity outside China remains underdeveloped and requires sustained, deliberate support to scale and become commercially viable.
Q1: Has the United States utilized industrial policy for minerals security before the current wave?
A1: Of course. Industrial policy has underpinned U.S. minerals security for more than a century. In moments of crisis from World War I through the Cold War, Washington did not rely on markets alone. It built strategic stockpiles, imposed price and production controls, financed mines and processing facilities at home and abroad, and negotiated foreign procurement and barter agreements to secure critical inputs.
These interventions were not ideological. Instead, they were pragmatic responses to supply shocks and wartime vulnerability. When private capital could not absorb the risk, when prices collapsed or spiked unpredictably, or when adversaries controlled key materials, the government stepped in to stabilize supply and ensure the defense industrial base could function. Industrial policy, in this context, was less about picking winners and more about guaranteeing access to the minerals that underpin national power. Some examples include:
- War Minerals Stimulation Law (1918): The first large-scale U.S. intervention in mineral markets authorized the president to take over and operate undeveloped mineral deposits, mines, and smelters deemed vital to the war effort. Backed by a $50 million fund, the law also empowered the creation of government corporations to boost production and manage distribution.
- Financing Foreign Supply (1942): The U.S. government funded a state-of-the-art nickel mine in Cuba to secure a critical wartime supply, stepping in where private markets were not delivering.
- Price Floors (1948): The U.S. Atomic Energy Commission announced guaranteed minimum prices for uranium ore. The federal government committed to purchasing all domestically produced uranium, effectively making itself the sole buyer and establishing a guaranteed market for producers.
- Production Controls (1951): To ensure there were minerals available for defense use, the National Production Authority banned copper use in more than 300 consumer products, reserving it for essential applications without substitutes.
- Barter for Strategic Minerals (1954): Under the Agricultural Trade Development and Assistance Act, the United States exchanged surplus agricultural commodities for strategic minerals. Sections 202 and 203 explicitly authorized mineral barters. In 1982, the United States secured roughly 1.6 million tons of bauxite from Jamaica in exchange for dairy products, using creative procurement to strengthen mineral supply chains.
- Reviving the National Defense Stockpile (1981): President Ronald Reagan launched the first major stockpile purchase program in over two decades, warning of U.S. vulnerability to sudden raw material shortages affecting defense production.
Q2: How is the Trump administration using industrial policy?
A2: The Trump administration has deployed a comprehensive industrial policy toolkit for critical minerals, combining price floors, direct equity investments, public procurement, foreign sourcing agreements, and strategic stockpiling. It has also leveraged political risk insurance, concessional financing, loan guarantees, and offtake agreements. Rather than relying on a single instrument, the administration has used a broad set of tools to stabilize markets, strengthen domestic and allied capacity, and reduce exposure to concentrated supply chains. Some examples are:
- Stockpiling: Project Vault is a strategic critical minerals stockpile that operates to give manufacturers predictable access to 60 essential minerals during disruptions. It is backed by a $10 billion loan from the Export-Import Bank of the United States (EXIM)-the largest in its 92-year history. This revives a classic industrial policy tool: government-supported reserves to reduce exposure to volatile or adversarial supply chains.
- Equity: The U.S. government has taken direct equity stakes in strategic mineral assets both domestically and internationally to strengthen supply chain security. Domestically, it has taken equity stakes in Trilogy Metals, MP Materials, Korea Zinc, Atalco, and Lithium Americas to support upstream mining and processing capacity. Internationally, it has partnered with Maaden to take an equity position in a rare earths refinery in Saudi Arabia.
- Public Procurement: The U.S. government signed a 10-year agreement to purchase 100 percent of the output from MP Materials' planned "10X" magnet facility. The U.S. Defense Logistics Agency also signed a five-year contract to purchase up to $245 million in antimony from the United States Antimony Corporation.
- Foreign Supply Arrangements: After President Félix Tshisekedi of the Democratic Republic of the Congo (DRC) proposed a minerals-for-security arrangement with the United States, Washington helped facilitate the signing of a peace deal. While peace in eastern Congo remains elusive, U.S.-DRC minerals cooperation has progressed, including a U.S. company working to acquire the Chemaf mine and a recent offtake agreement for 100,000 tons of Congolese copper to the United States (aligned to the Strategic Partnership Agreement between the United States and the DRC).
- Price Controls: The U.S. government established a 10-year $110 per kg price floor for neodymium praseodymium oxide (NdPr) to support MP Materials. Since then, the administration has moved beyond asset-specific arrangements toward a broader, market-based approach. At the 2026 Critical Minerals Ministerial, Vice President JD Vance outlined a plurilateral strategy to enhance price stability through a preferential critical minerals trade zone with enforceable price floors.
Q3: Will all of these efforts work?
A3: Over the past six months, the U.S. government has mobilized more than $30 billion in letters of interest, loans, investments, and equity commitments across multiple agencies with financing authority. Although these large-scale interventions are significant, they are not without risk. Government financing can serve as a critical "bridge to bankability" for minerals projects that have historically struggled to attract private capital in an environment defined by high-risk, low commodity prices, and long development timelines. However, public capital cannot substitute for fundamentally sound project economics.
Rare earth elements have become the centerpiece of the U.S. industrial policy interventions. They are essential to defense and civilian applications and have repeatedly been subject to Chinese export restrictions. Yet, rare earths are among the most difficult mineral commodities to produce economically. Although they are relatively abundant in the Earth's crust, they rarely occur in high-concentration deposits. Their separation and processing are technically complex, and production entails significant reagent, energy, and environmental management costs. High ore grades are critical to the economic viability of rare earth mines. Higher-grade deposits require less material to be extracted and processed, making separation more efficient and significantly reducing overall costs.
Programs & Projects
Remote Visualization
Even with substantial financial backing, the commercial viability of certain projects remains challenging. USA Rare Earth recently secured a letter of intent from the Department of Commerce's CHIPS Program for a $1.6 billion debt-and-equity package to develop a domestic rare earths mine in Round Top, Texas, and a permanent magnet manufacturing facility in Oklahoma. The mine was first identified in the 1970s during exploration for fluoride and beryllium, but the deposit was never mined, owing partially to commercial viability challenges.
The most significant economic risk facing Round Top is its exceptionally low ore grade. At approximately 0.03 percent total rare earth oxides (TREO), the deposit is orders of magnitude lower than higher-grade operations such as Mt. Weld, Mountain Pass, and Pela Ema. This creates a fundamental "volume problem." To produce the same quantity of TREO as Mt. Weld, Round Top would need to mine and process roughly 100-150 times more rock. The grade differential will drive cost inflation, processing complexity, materials handling challenges, and sustained capital intensity over the life of the project.
Higher-grade deposits require less material to be mined and processed, which makes separation more efficient and reduces overall operating costs. Low-grade deposits can be economic, but their viability typically depends on advances in processing and recovery technologies that must be demonstrated at a commercial scale. Proving and deploying those technologies takes time, capital, and carries meaningful execution risk.
Additionally, although USA Rare Earth has highlighted that Round Top is heavy rare earth-enriched on a relative basis, the absolute concentrations remain materially lower than those found in competing deposits. For dysprosium, Browns Range contains approximately 840 parts per million (ppm), Mt. Weld around 400 ppm, Pela Ema roughly 48 ppm, while Round Top averages just 30 ppm. The gap is similar for terbium: Browns Range reports about 120 ppm, Mt. Weld approximately 100 ppm, and Round Top only 3 ppm. Yttrium follows the same pattern, with Mt. Weld at roughly 1,360 ppm compared to 248 ppm at Round Top. These differences are not marginal-they reflect substantial disparities in the volume of material that must be mined and processed to produce the same quantity of heavy rare earth output.
Remote Visualization
Additionally, Round Top presents a significant metallurgical challenge because it is effectively a geochemical "soup." In addition to 15 rare earths, there are an additional 23 minerals, including meaningful concentrations of lithium, beryllium, uranium, and thorium. The presence of multiple metals in solution also heightens purity risk. Each additional element becomes a potential impurity stream that must be removed through additional separation steps. Achieving the 99 percent purity required for high-tech and defense applications is materially more difficult when starting from a complex, multi-metal solution like Round Top's, compared to cleaner mineral systems.
Another structural risk is Round Top's heavy economic reliance on byproducts. In the 2019 preliminary economic assessment, lithium was projected to account for 32 percent of total project revenue. This creates commercial complexity, where the viability of rare earth production is indirectly dependent on the strength of secondary commodity markets. That dependence introduces exposure to market volatility. If lithium prices decline sharply, the overall project economics could deteriorate to the point where rare earth production becomes uneconomic on a stand-alone basis. In contrast, higher-grade operations such as Mt. Weld function more as "pure play" rare earth assets, with economics primarily anchored in REE production rather than byproduct cross-subsidization.
And finally, a Definitive Feasibility Study (DFS) for Round Top has not yet been completed. A DFS is a critical milestone in mine development, as it provides the detailed engineering, cost estimates, recovery assumptions, capital requirements, and financial modeling necessary to assess whether a project is economically viable under realistic market conditions.
Q4: What happens if they don't work?
A4: Not every project will succeed, and that is inherent to any industrial strategy. While there are fiscal considerations, the broader approach is intentionally diversified, with the United States and its allies supporting a portfolio of projects across commodities and jurisdictions. If a sufficient number reach commercial scale, the overall objective of strengthening supply security and reducing concentration risk can still be achieved.
The mining sector is inherently high-risk owing to technological, geopolitical, and commodity price cycle risks. For example, the Department of Defense awarded $90 million in Defense Production Act funds to Albemarle alone in 2023 for the reopening of the King's Mountain lithium mine in North Carolina. The mine was originally scheduled to reopen in 2026, but production has been delayed due to the collapse of lithium prices.
Q5: What steps can the United States take to ensure that critical mineral interventions translate into durable production capacity and sustained private investment?
A5: The United States government's industrial policy measures will be most effective in building diverse and secure critical mineral supply chains if combined with rigorous due diligence, clear and measurable performance milestones, and strong international partnerships. Embedding these disciplines from the outset not only improves project outcomes and capital efficiency but also makes interventions more politically durable across administrations.
- Complete Rigorous Due Diligence Before Public Announcement: As the United States advances strategic critical mineral initiatives, completing rigorous technical and commercial due diligence prior to public announcements can help ensure long-term success. Confirming economic and project viability before signaling federal support strengthens investor confidence, protects scarce public financing tools, and reinforces U.S. credibility. Sequencing technical validation ahead of policy endorsement helps ensure that strategic interventions are durable, defensible, and capable of attracting sustained private capital. A disciplined approach can also reduce future controversy and mitigate the risk of politically-induced delays that have historically affected mining projects.
- Tie Federal Support to Performance Milestones: Federal loans, grants, or offtake agreements should be milestone-based and tied to permitting progress, construction timelines, private capital commitments, and recovery benchmarks. This ensures that public capital supports execution. Milestone-based structures protect taxpayer dollars by aligning incentives: projects that advance receive continued support; projects that stall do not continue drawing federal resources.
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Build Allied Supply Chains: Where domestic deposits are subscale, low-grade, or economically marginal in the near term, the United States should pursue a parallel strategy of deepened allied integration rather than overextending scarce federal capital. Strength in critical minerals will not come from attempting autarky at any cost; it will come from building a resilient, trusted production network anchored in close security and trade partners. Australia is the clearest example. As home to globally competitive rare earth deposits, Australia already supplies a significant share of non-Chinese rare earth feedstock. An allied model allows the United States to concentrate domestic resources on segments where it can build a durable advantage-particularly midstream separation, magnet manufacturing, and advanced materials-while securing upstream inputs through long-term, security-aligned supply arrangements.
Gracelin Baskaran is director of the Critical Minerals Security Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Meredith Schwartz is an associate fellow for the Critical Minerals Security Program at CSIS.
Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
© 2026 by the Center for Strategic and International Studies. All rights reserved.
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CSIS - Center for Strategic and International Studies Inc. published this content on February 26, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on February 26, 2026 at 22:56 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]