Lawmakers propose $2.5B agency to boost production of rare earths and
other critical minerals
[January 16, 2026] By
DIDI TANG and JOSH FUNK
WASHINGTON (AP) — A bipartisan group of lawmakers have proposed creating
a new agency with $2.5 billion to spur production of rare earths and the
other critical minerals, while the Trump administration has already
taken aggressive actions to break China's grip on the market for these
materials that are crucial to high-tech products, including cellphones,
electric vehicles, jet fighters and missiles.
It’s too early to tell how the bill, if passed, could align with the
White House’s policy, but whatever the approach, the U.S. is in a crunch
to drastically reduce its reliance on China, after Beijing used its
dominance of the critical minerals market to gain leverage in the trade
war with Washington. President Donald Trump and Chinese President Xi
Jinping agreed to a one-year truce in October, by which Beijing would
continue to export critical minerals while the U.S. would ease its
export controls of U.S. technology on China.
The Pentagon has shelled out nearly $5 billion over the past year to
help ensure its access to the materials after the trade war laid bare
just how beholden the U.S. is to China, which processes more than 90% of
the world's critical minerals. To break Beijing's chokehold, the U.S.
government is taking equity stakes in a handful of critical mineral
companies and in some cases guaranteeing the price of some commodities
using an approach that seems more likely to come out of China's playbook
instead of a Republican administration.
The bill that Sen. Jeanne Shaheen, D-N.H., and Sen. Todd Young, R-Ind.,
introduced Thursday would favor a more market-based approach by setting
up the independent body charged with building a stockpile of critical
minerals and related products, stabilizing prices, and encouraging
domestic and allied production to help ensure stable supply not only for
the military but also the broader economy and manufacturers.
Shaheen called the legislation “a historic investment” to make the U.S.
economy more resilient against China’s dominance that she said has left
the U.S. vulnerable to economic coercion. Young said creating the new
reserve is “a much-needed, aggressive step to protect our national and
economic security.”
Rep. Rob Wittman, R.-Va., introduced the House version of the bill.
New sense of urgency
When Trump imposed widespread tariffs last spring, Beijing fought back
not only with tit-for-tat tariffs but severe restrictions on the export
of critical minerals, forcing Washington to back down and eventually
agree to the truce when the leaders met in South Korea.
On Monday, in his speech at SpaceX, Defense Secretary Pete Hegseth
revealed that the Pentagon has in the past five months alone “deployed
over $4.5 billion in capital commitments” to close six critical minerals
deals that will “help free the United States from market manipulation.”
One of the deals involves a $150 million of preferred equity by the
Pentagon in Atlantic Alumina Co. to save the country's last alumina
refinery and build its first large-scale gallium production facility in
Louisiana.
Last year, the Pentagon announced it would buy $400 million of preferred
stock in MP Materials, which owns the country's only operational rare
earths mine at Mountain Pass, California, and entered into a
$1.4-billion joint partnership with ReElement Technologies Corp. to
build up a domestic supply chain for rare earth magnets.
On Wednesday, Trump announced in a proclamation that the U.S. is “too
reliant” on foreign-sourced critical minerals and directed his
administration to negotiate better deals. He said possible remedies
would include minimum import prices for certain critical minerals.
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Workers use machinery to dig at a rare earth mine in Ganxian county
in central China's Jiangxi province on Dec. 30, 2010. (Chinatopix
via AP, File)
 “Reshoring manufacturing that’s
critical to our national and economic security is a top priority for
the Trump administration,” said Kush Desai, a White House
spokesperson.
The drastic move by the U.S. government to take equity stakes has
prompted some analysts to observe that Washington is pivoting to
some form of state capitalism to compete with Beijing.
“Despite the dangers of political interference, the strategic logic
is compelling,” wrote Elly Rostoum, a senior fellow at the
Washington-based research institute Center for European Policy
Analysis. She suggested that the new model could be “a prudent way
for the U.S. to ensure strategic autonomy and industrial
sovereignty.”
Companies across the industry are welcoming the intervention from
Trump's administration.
“He is playing three-dimensional chess on critical minerals like no
previous president has done. It's about time too, given the military
and strategic vulnerability we face by having to import so many of
these fundamental building blocks of technology and national
defense,” NioCorp's Chief Communications Officer Jim Sims said. That
company is trying to finish raising the money it needs to build a
mine in southeast Nebraska.
Relying on allies for help
In addition to trying to boost domestic production, the Trump
administration has sought to secure some of these crucial elements
through allies. In October, Trump signed an $8.5 billion agreement
with Australia to invest in mining there, and the president is now
aggressively trying to take over Greenland in the hope of being able
to one day extract rare earths from there.
On Monday, finance ministers from the G7 nations huddled in
Washington over their vulnerability in the critical mineral supply
chains.
U.S. Treasury Secretary Scott Bessent, who has led several rounds of
trade negotiations with Beijing, urged attendees to increase their
supply chain resiliency and thanked them for their willingness to
work together “toward decisive action and lasting solutions,”
according to a Treasury statement.
The bill introduced on Thursday by Shaheen and Young would encourage
production with both domestic and allied producers.
Past efforts to bolster rare earths production
Congress in the past several years has pushed for legislation to
protect the U.S. military and civilian industry from Beijing's
chokehold. The issue became a pressing concern every time China
turned to its proven tactics of either restricting the supply or
turned to dumping extra critical minerals on the market to depress
prices and drive any potential competitors out of business.
The Biden administration sought to increase demand for critical
minerals domestically by pushing for more electric vehicle and
windmill production. But the Trump administration largely eliminated
the incentives for those products and instead chose to focus on
increasing critical minerals production directly.
Most of those past efforts were on a much more limited scale than
what the government has done in the past year, and they were largely
abandoned after China relented and eased access to critical
minerals.
___
Funk reported from Omaha, Nebraska. AP writer Konstantin Toropin
contributed to the report.
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