The United States is considering the establishment of a substantial $5 billion mining investment fund aimed at enhancing its security in critical minerals. This initiative, reported by Bloomberg, represents a significant move towards direct investment in securing vital resources. As a result of this news, shares of rare earth companies MP Materials and USAR have seen notable increases.
Negotiations are underway between the U.S. International Development Finance Corporation (DFC) and Orion Resource Partners, a New York-based investment firm. Although the terms of the joint venture are still being finalized, the proposed structure would involve equal contributions from both parties, ultimately targeting a combined investment of $5 billion. This approach mirrors Orion’s earlier partnership with Abu Dhabi’s ADQ, which secured a total of $1.2 billion.
The urgency of this initiative arises from growing concerns over the global supply chains for critical minerals. Currently, China dominates the processing of essential metals, including copper, cobalt, and rare earths, while also expanding its influence in mining operations worldwide. Forecasts suggest that the industry may face significant shortages in the coming years due to insufficient investment, declining ore grades, and slow permitting processes.
Strategic Investments and Market Reactions
The DFC, established during the latter part of Donald Trump’s presidency, has already supported various mining projects across several regions, including a $150 million loan to Syrah Resources, a key supplier for Tesla, and $550 million for railway upgrades in the Lobito Corridor of Angola. Should the DFC finalize a commitment of $2.5 billion to Orion, it would become the agency’s largest investment to date.
In response to the reported DFC plans, the stock price of MP Materials has surged significantly this year. Following the announcement of the Pentagon’s investment, shares jumped by more than 50%. Further market momentum was generated when Apple disclosed a $500 million supply agreement with MP Materials, contributing to an impressive year-to-date gain of over 200-250% by mid-July. Over the past year, the stock has rallied by more than 370%.
The proposed fund underscores the shifting landscape of mineral investment and the critical role governments may need to play in securing resources vital for technology and green energy. As the DFC navigates these discussions, the implications for both companies and national security remain profound.
