Strategic Critical Minerals Projects

Governments around the world have recognized that market forces alone cannot build the diversified critical mineral supply chains needed for energy security, defense readiness, and economic competitiveness. The result has been an unprecedented mobilization of public resources, from direct grants and loans to tax incentives, diplomatic initiatives, and regulatory fast-tracking, aimed at accelerating the development of strategic critical mineral projects. These government-backed initiatives span every stage of the value chain, from mining and refining to recycling and advanced materials manufacturing, and they are reshaping the investment landscape for the entire sector.

United States: Defense Production Act and DOE Programs

The United States has deployed multiple policy instruments to support critical mineral supply chain development. The Defense Production Act (DPA) Title III program, administered by the Department of Defense, has provided hundreds of millions of dollars in direct investments to companies developing domestic mining, processing, and manufacturing capabilities for critical minerals. Notable DPA-funded projects include MP Materials' rare earth separation and magnet manufacturing expansion at Mountain Pass and Fort Worth, Lynas Rare Earths' processing facility in Seadrift, Texas, Berkshire Hathaway Energy's lithium extraction from geothermal brines in California, and Albemarle's lithium processing expansion. The DPA enables the government to make investments, purchase commitments, and loan guarantees to companies whose products are deemed essential for national defense.

The Department of Energy (DOE) has been equally active. The DOE Loan Programs Office (LPO) has extended conditional loan commitments worth billions of dollars to battery materials companies, recyclers, and critical mineral processors. The Battery Materials Processing Grants program has awarded funding to dozens of projects across the battery supply chain. The Federal Consortium for Advanced Batteries (FCAB) coordinates government efforts to build a domestic lithium-ion battery supply chain. The Inflation Reduction Act created production tax credits for critical mineral extraction and processing and sourcing requirements that incentivize domestic and free-trade-agreement-partner production. Together, these programs represent the most significant U.S. government intervention in mineral supply chains since the Cold War era of strategic stockpiling.

European Union: Critical Raw Materials Act

The European Union adopted the Critical Raw Materials Act (CRMA) in 2024, establishing binding targets for European domestic capacity at each stage of the critical mineral supply chain. The CRMA targets stipulate that by 2030, at least 10 percent of the EU's annual consumption of critical raw materials should be mined domestically, 40 percent should be processed in the EU, 25 percent should come from recycling, and no more than 65 percent of any strategic raw material should be sourced from a single third country. These targets are backed by streamlined permitting procedures, with maximum timelines of 24 months for extraction projects and 12 months for recycling and processing projects, and by new financial mechanisms including access to the InvestEU program and the European Investment Bank.

Strategic projects recognized under the CRMA receive priority permitting treatment and access to preferential financing. The EU has identified specific minerals and materials as strategic, including lithium, cobalt, nickel, rare earths, manganese, graphite, and others essential for the green and digital transitions. The European Raw Materials Alliance (ERMA) has compiled an investment pipeline of over 100 projects seeking funding for development in Europe, spanning mining, refining, recycling, and advanced materials manufacturing. The CRMA also empowers the EU to build strategic stockpiles and establishes monitoring mechanisms for supply chain risk. For details on the EU's list of critical and strategic materials, see EU Critical Raw Materials Act.

Australia's Critical Minerals Strategy

Australia is one of the world's largest producers of lithium, rare earths, manganese, cobalt, and other critical minerals, and the government has positioned the country as a preferred supplier for allied nations seeking to diversify away from Chinese processing. The Australian Critical Minerals Strategy, updated in 2023, provides a framework for supporting domestic value-addition to Australian mineral resources through grants, loans, and diplomatic partnerships. The Critical Minerals Facility, managed by Export Finance Australia, has provided concessional loans to projects including Iluka Resources' rare earth refinery at Eneabba, Renascor Resources' graphite purification plant, and EcoGraf's battery anode material facility.

Australia has also signed critical minerals partnership agreements with the United States, Japan, South Korea, India, the European Union, and the United Kingdom, creating bilateral frameworks for investment, technology transfer, and preferential trade in critical minerals. The Australia-United States Climate, Critical Minerals, and Clean Energy Transformation Compact provides a framework for cooperation on critical mineral supply chain development. These diplomatic efforts complement domestic investment in positioning Australia as a key node in allied critical mineral supply chains, though the country faces ongoing challenges in building midstream processing capacity to move beyond raw material exports.

Canada, Japan, South Korea, and Allied Nation Programs

Canada's Critical Minerals Strategy, launched in 2022 and backed by C$3.8 billion in federal funding, targets the development of the country's substantial lithium, nickel, cobalt, graphite, and rare earth resources. The strategy includes a Critical Minerals Infrastructure Fund to support transportation and energy infrastructure in remote mining regions, tax incentives for mineral exploration and processing, and streamlined environmental assessment processes. Natural Resources Canada administers grants and contributions to specific critical mineral projects through mechanisms including the Critical Minerals Research, Development and Demonstration Program.

Japan's economic security legislation includes provisions for securing critical mineral supply through stockpiling, long-term offtake agreements, investment in overseas mining projects, and support for domestic recycling capacity. The Japan Organization for Metals and Energy Security (JOGMEC) provides financing, equity investment, and technical support for critical mineral projects worldwide. South Korea's Ministry of Trade, Industry and Energy has launched programs to diversify rare earth and battery material supply sources, including support for Korean companies investing in mining and processing projects in Australia, Canada, Chile, and Africa. The Minerals Security Partnership, a U.S.-led coalition of allied nations, coordinates government investment in critical mineral projects that meet shared strategic objectives. For analysis of how these partnerships work, see friendshoring and partnerships.

Effectiveness and Challenges

Government-backed strategic projects have dramatically accelerated critical mineral supply chain development, but their effectiveness is not without question. Critics argue that government subsidies risk distorting markets, picking technological winners and losers, and creating dependencies on continued public support. Some funded projects have faced delays, cost overruns, or technical setbacks, raising concerns about the efficiency of public capital allocation. Permitting reform, while a stated priority across all major programs, has often proved politically difficult to implement given competing environmental, indigenous rights, and community interests. The sheer scale of China's existing processing infrastructure and cost advantages means that even with billions of dollars in government support, Western projects face a challenging competitive environment. Nevertheless, the strategic imperative to reduce vulnerability to supply chain disruption has created a broad political consensus in favor of continued and expanded government intervention in critical mineral markets. For more on the permitting dimension, see strategic projects and permitting.