Highlights

• U.S. federal investments in critical minerals are scattered across multiple sectors without a clear prioritization framework, diluting impact against China's integrated dominance.
• The Department of Defense's price floor and offtake commitment for MP Materials demonstrates effective industrial policy by addressing market volatility, unlike equity-only deals.
• Rare-earth magnets emerge as the only segment with strategic U.S. policy coherence, though current price insurance approaches preserve firms without building competitive supply chains.

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Why a transaction-by-transaction approach won’t break China’s grip on critical minerals, that’s from a new analysis from Resources (opens in a new tab) arguing that recent U.S. federal investments in critical minerals are energetic but unfocused—and unlikely, on their own, to reset supply-chain power away from China.

That diagnosis aligns with some of Rare Earth Exchanges™ analyses. Mining and processing are capital-intensive, brutally price-sensitive industries, and Chinese incumbents dominate both cost curves and scale. The deeper issue, however, is not merely how much capital Washington is deploying—but how it is deploying it: deal by deal, transaction by transaction, without a comprehensive industrial policy backbone.

A Portfolio Without a North Star

The article correctly observes that federal equity stakes now span base metals, lithium, rare-earth processing, and magnet fabrication—without a transparent prioritization framework. This reflects a broader Trump-era pattern: tactical transactions substituted for strategy. If the objective is near-term defensereadiness, scattering capital across projects with decade-long timelines dilutes impact.

Rare-earth magnets are different. They sit inside precision weapons, aircraft, and advanced electronics, and China controls most upstream processing and downstream magnet capacity. Not all bottlenecks are equal. Industrial policy requires ranking them—and committing accordingly.

When Intervention Actually Works

The strongest factual section centers on MP Materials. The Department of Defense’s price floor and 10-year offtake commitment—covering most future magnet output—directly address the core market failure: price volatility. This is not symbolic equity. It is demand certainty. It works precisely because it looks less like a one-off transaction and more like an embryonic industrial policy tool. Cost overruns remain a risk, but the economic logic is coherent.

 Lithium and the Demand Mirage

Skepticism around Lithium Americas is also well grounded. Equity without price support, amid weakening electric-vehicle demand signals and shifting federal incentives, exposes taxpayers to downside risk. The lesson is structural: supply policy cannot outrun demand policy. Capital alone does not create markets—coordination does.

The Missing Industrial Spine

Where the analysis understates the problem is in treating equity stakes as merely insufficient rather than symptomatic. The Trump administration’s approach remains fundamentally transactional—reactive deals instead of a rules-based industrial system. Equity can catalyze private capital, but only when paired with broad price floors, binding offtakes, procurement mandates, workforce planning and development, and allied coordination. Without that spine, even well-intentioned deals struggle to scale. Likewise, framing China’s export controls as a predictable “repeated game” is analytically neat but geopolitically fragile. Supply chains break at regime shifts, not equilibrium points.

Rare Earth Exchanges’ research note argues that Pentagon-style rare earth price-floor agreements function primarily as price insurance rather than true industrial policy: they stabilize producer revenues but do not, on their own, secure downstream magnet capacity, competitive cost curves, supply-chain redundancy, or durable national leverage—despite parallel, separate efforts such as magnet recycling initiatives.

By socializing commodity price risk while preserving private upside, these structures shift volatility to taxpayers without guaranteeing volumes, mandating magnet manufacturing, or enforcing cost-reduction glidepaths, and—if index prices float far above global benchmarks—risk-rewarding the highest-cost producers while crowding out lower-cost alternatives. In contrast to China’s strategy of sustained low pricing paired with downstream dominance, this approach remains defensive and transactional, preserving firms rather than building integrated, competitive rare-earth magnet supply chains—reinforcing the REEx view that price insurance keeps companies alive, but industrial policy builds nations.

Why This Matters for Rare Earths

For investors, the signal is clear. Rare-earth magnets are emerging as the only segment where U.S. policy shows strategic coherence. And even there, we have our concerns. Everything else remains experimental. Until Washington moves beyond transaction politics and pairs capital with durable pricing power and long-term demand, China’s structural advantage will persist.

Source: Resources for the Future, Jan. 6, 2026

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