From Battlefield to Mine Shaft: The Department of War’s Critical Minerals Play

Critical minerals have become a major headache for the Trump administration.

First, imposing steep reciprocal tariffs disrupted long-standing trade routes.

Then policymakers realized that tariffs made a big problem bigger: the US lacks reliable domestic sources of the metals that play a critical role in defense systems, electric vehicles, and renewable energy infrastructure.

To avoid an acute shortage of these metals—copper, zinc, lithium, rare earth elements (REEs), antimony, and others—they were explicitly exempted from the tariff list.

Yet relying on exemptions is only a stop-gap solution. Recognizing this vulnerability, the Department of War (DOW, also known as the former Department of Defense) has shifted from policy tweaks to direct market intervention, underwriting critical minerals projects at the very base of the supply chain: mining and refining.

Millions of dollars in grants, equity stakes, and loan guarantees are already committed, with more on the horizon.

National Security

The 2025 tariff package imposed a minimum 10% duty on most traded goods, but Annex II carved out strategic metals to preserve critical supply lines. That carve-out bought some time, yet only if the US could ramp up its domestic output.

For decades, the US relied on imports for rare earth magnets in jet engines, lithium for batteries, and tungsten for precision hardware. Geopolitical tensions and pandemic-era disruptions exposed how reliant defense programs are on foreign producers. The DOW's new funding initiatives aim to eliminate that dependency by jump-starting American mines and processing plants.

Equity, Grants, and Guarantees

Under Executive Order 14241, DOW invoked the Defense Production Act (DPA) Title III to designate “defense minerals” as a priority. That authority allows the department to:

• Acquire direct equity stakes in strategic projects, de-risking private capital raises.
• Provide non-dilutive grants for front-end engineering and pilot-scale facilities.
• Guarantee loans through partner agencies like the US International Development Finance Corporation (DFC) and the Department of Energy’s Loan Programs Office.
• Expedite permitting and environmental reviews via interagency coordination.

These tools unlock funding, accelerate timelines, and send a clear signal: Washington will underwrite projects deemed vital to national security.

Current Commitments

The White House moved fast to collaborate with US-based private companies working in the critical minerals space. The list of the US government’s latest initiatives includes:

1. MP Materials: DOW acquires roughly 30% of the company (up to $500 million) to fund expansions of REE separation circuits and on-shore magnet manufacturing. The agreement also includes a binding ten-year offtake guarantee covering 100% of the facility’s magnet output, securing a domestic supply of neodymium, praseodymium, and other light REEs.
2. Fireweed Metals: DPA Title III awarded $15.8 million for front-end engineering and design of the company’s tungsten deposit. The funding was supported by over C$35.4 million from the Canadian government. Tungsten’s high density and melting point make it indispensable for armor-piercing projectiles and jet-engine components.
3. Perpetua Resources: The company has secured up to $22.4 million from the DOW to fund development of its Stibnite gold-antimony project. Additionally, earlier this year, Perpetua submitted a formal application to the Export-Import Bank of the United States, seeking up to $2.0 billion in debt.

Aside from that, the Department of Energy (DOE) plans to invest over half a billion dollars to accelerate US critical minerals projects, with solicitations in four program areas:

• Battery Materials Processing and Manufacturing & Recycling Grant Program: up to $500 million.
• Critical Minerals and Materials Accelerator: up to $50 million.
• Rare-Earth Magnet Supply Chain Demonstrations: no funding limit.
• Direct Lithium Extraction & Separation Technologies: no funding limit.

Risks and opportunities

DOW, along with other agencies, plans to allocate funding for companies working in the critical minerals area. Grants and equity stakes de-risk project development by covering pre-production costs and smoothing access to capital markets. Permitting expedites when agencies coordinate under DPA authority, compressing timelines by months or even years.

Yet risks remain:

• Project economics hinge on long-term metals pricing, which can swing with global demand and new mines coming online abroad.
• Technical execution of separation, especially for mixed REE deposits, remains challenging and capital-intensive.
• Regulatory hurdles—from water rights to tribal consultations—can introduce delays even with priority permitting.
• Junior miners often face financing gaps when transitioning from pilot to commercial scale, necessitating follow-on equity raises or debt.

Mitigating these risks requires disciplined due diligence. Investors looking to build positions in the critical minerals onshoring trend should scrutinize resource grades, recovery rates, power and water requirements, and the track records of management teams in delivering complex projects.

Takeaway

The US government has created a massive opportunity for companies with the right assets—and for investors with the right approach to the mining sector. To find the best stocks in this space, consider these tips:

1. Target US-based critical minerals producers with explicit DOW or DFC support—these firms benefit from non-dilutive grants and other capital injections.
2. Assess project de-risking factors: government backing accelerates permitting, underwrites pre-production costs, and often unlocks follow-on debt or equity.
3. Conduct rigorous due diligence on resource quality, processing technology, and regulatory timelines, but give extra weight to firms whose strategic value extends beyond pure commodity markets.
4. Stay alert to new funding rounds: DFC/IBAS Notices of Funding Opportunity, DOE Loan Office news, and other agencies' updates.

We’ll keep you posted on the latest developments in the critical minerals space.

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