The Trump administration wants to shore up the U.S. position in critical minerals – rare Earth materials used in everything from semiconductors to lithium batteries, and not readily available domestically.
A new report says the administration wants to get some of the money such a project would need by taking $2 billion from the CHIPS Act. That law, passed during the Biden administration, provides funding to semiconductor-makers who produce their products in the U.S.
Ernest Scheyder reported the story for Reuters News Service where he’s senior correspondent. He says the move would also increase the role of Commerce Secretary Howard Lutnick in minerals’ projects. Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: This plan to move CHIPS money into minerals projects is not a done deal as you report, but why minerals? What are we talking about, mining projects?
Ernest Scheyder: Certainly a lot of these semiconductors require supplies of germanium, gallium, and other critical minerals that the United States produces very little of right now. So there are certain synergies in looking at the CHIPS Act and saying, “could some of that money be reallocated?”
Also, most importantly here, this is money that has been assigned by Congress. Congress has already put this money out the door. So as the Trump administration looks for buckets of money to tap, it’s seeing this CHIPS Act funding as a potential place to go to get money for what it sees as a strategic vulnerability for the United States. So it makes logical sense there.
Let’s talk about the strategic vulnerability here. It’s my understanding that the administration’s already indicated an interest in this field with a recent Pentagon investment in a rare earth mineral company called MP Materials. Can you say more about that and where the U.S. stands when it comes to getting these resources that are so important in the semiconductor biz?
That’s right. MP Materials owns the only rare earths mine in the United States. It’s in southern California.
And rare earth, before you go to your periodic table of the elements, just think of them as the minerals that are used to make magnets that turn power into motion. So the thing that makes your cell phone vibrate is a rare earth magnet.
Now, the United States doesn’t produce any of these magnets right now, and is overly reliant on China. So you’ve got MP Materials, which owns this mine, and it’s actually building a facility in Texas in the Fort Worth area that will be up and running soon. And so to address that vulnerability, the Trump administration made a huge investment last month in the company – not only bought a bunch of its shares, but arranged a private loan from two banks, and also guaranteed a price for all of its products.
It’s a pretty large investment. But part of the issue that raised some eyebrows with that deal is that the money for it was not allocated by Congress. So here in this CHIPS Act move, if it actually moves forward by the Trump administration, you’ve got a bucket of money that could be used for minerals projects. And so that’s part of reason why the White House and others are looking at this CHIPS Act area.
Something that you point out, which is rather interesting, is that if this move goes forward, this would, shall we say, enhance the role of the commerce secretary, Howard Lutnick. Say more about that.
So Howard Lutnick, as you say, the Commerce Department secretary – who ostensibly has a role in trade, but we’ve actually seen other departments, as the tariff negotiations have moved forward in recent months, maybe eclipse or outshine him. But what we do know is also that there have been other departments in the U.S. federal government that have been trying to also exert their influence over the critical mineral sphere.
So the MP Materials deal that you mentioned was overseen and pushed forward largely by the Pentagon. There’s been some attempts by the Energy Department, the Interior Department, and others. And so what sources are telling us is that Commerce Secretary Howard Lutnick will have a much, much greater role – sort of almost as a central clearinghouse moving forward for some of these capital allocations or reallocations, as the case may be.
And our sources are telling us that Secretary Lutnick is going to go look for other buckets of money that have already been allocated by Congress and see if there are ways to creatively reallocate them moving forward for critical minerals-related projects. So if it moves forward, it would be a big vote of confidence by the Trump administration in Secretary Lutnick.
And I should say that in a previous role when he was in private industry, he ran Cantor Fitzgerald, which was a brokerage firm that has invested heavily in a Greenland rare earths project. So it is a sector that he is familiar with.
Greenland – you don’t say. That’s very interesting indeed.
What does this reveal to you as someone who covers this industry? What does all of this reveal about what’s happening behind the scenes when it comes to the CHIPS Act and what appears to be maybe various players in Washington sort jockeying for a role here?
What’s fascinating to me the most here is you have an industry in the mining industry that for decades was very, very opposed to any sort of central government planning, considered itself very politically conservative. A lot of members of the mining industry are historically Republicans, sort of small government Republicans.
And partly due to competition from China, steep, steep competition from China – not just in the supply chain, but also in the technical space – we have an industry now that is so overly reliant on Washington. It’s sort of grown into a position where it almost needs Washington in order just to survive. And to me, that’s one of the most fascinating things here, is that you’ve got companies that are saying to Washington that “we need to partner with you. We need your price support. We need you to invest in our mining operations. We needs you to take tariff action to prevent Chinese imports.”
All of these things would have been anathema to the mining industry in the states 50 or 100 years ago. And here we are now and it’s happening, really, at a rapid clip. So to me, that’s really, really interesting.
Well, the president has been critical of the CHIPS Act. He’s called it a giveaway to the semiconductor industry. What do you make of this move and how it squares with the way the president’s been looking at the CHIPS Act so far?
Well, I mean, I would look at it in two areas.
One, I’m mean, the president knows that he needs Congress in order to spend money. He’s looking for money that’s already been allocated that he can somehow maybe move or adapt in a way to fit his plan. So the CHIPS Act sort of would fit in that role.
Also, he’s using some of the CHIPS Act money to now take equity stakes in companies. We saw just a few days ago the announcement of the investment in Intel. Now, that’s a grant that’s going to be turned into basically buying shares of Intel. So the U.S. Government will own a stake there. So instead of being a giveaway from the president’s perspective, now it’s the government owning a stake.
Now, there’s perhaps a different conversation to be had as to whether or not the U.S. Department of the Treasury should be owning a stake in a private company – perhaps a conversation for a different day. But from President Trump’s perspective, this is a way for the U S taxpayer to have skin in the game.
