Al Root

President Donald Trump is using America's most precious resource to fix its critical minerals problem: Cash. That could help mining investors in the long run.

Critical minerals, put most simply, are materials needed to run a modern economy, including copper, aluminum, and rare earth metals -- many of which mainly come from China. The U.S. might not have enough of them if the government doesn't address supply security now.

To address that issue, the U.S. International Development Finance Corporation is in talks with investment firm Orion Resource Partners to set up a $5 billion fund to invest in critical mineral projects, Bloomberg reported Tuesday.

Orion, which invests and finances mining projects, declined to comment on the report. The IDC said it doesn't comment on potential projects, adding it "continues to actively pursue investments that are aligned with administration priorities, including diversifying critical mineral supply chains."

A deal would essentially marry the government's ability to provide large sums of money with industry expertise, helping ensure mining projects get financed with needed materials flowing back into the U.S.

The importance of capital in the mining business can't be overstated: It ensures projects get the go-ahead. Plus, government backing can attract other investors and speed up the mine project development process.

The Trump administration has been relatively aggressive in addressing America's mineral needs. In April, the U.S. reached a critical minerals deal with Ukraine, which has an estimated $350 billion worth of critical mineral deposits, including lithium, copper, zinc, titanium, nickel, cobalt, and rare earth elements. The U.S.-Ukrainian framework provides for the creation of a reconstruction fund that will receive 50% of mining royalties, which can be invested into new mining projects.

In July, the Defense Department announced a deal with MP Materials for rare earth products. The deal included capital, a pricing floor mechanism, and an agreement to ensure all the products produced would have a buyer.

Those provisions aim to ensure that China -- which controls roughly 85% of global rare earth processing capacity -- can't bankrupt any Western players by flooding the market with low-price products. China is a major player in mining and materials processing, holding a significant share of the steel, copper, aluminum, rare earth, and other materials.

That's another reason employing government capital is helpful. Privately-funded Western mining companies, in one sense, compete with the Chinese government, which owns large stakes in many of China's mining enterprises.

What the U.S. government's capital could mean for mining investors, ideally, is less risk for new projects. That could boost the multiples of mining companies, but that is likely a short-term outcome.

Non-energy materials stocks in the S&P 500 trade for about 12 times trailing earnings before interest, taxes, depreciation, and amortization, or Ebitda, according to FactSet. Industrial companies in the S&P 500 trade for closer to 17 times.

Write to Al Root at allen.root@dowjones.com

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September 16, 2025 12:23 ET (16:23 GMT)

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