US plans more stakes in minerals companies, Trump official says

[WASHINGTON] The US government plans to take more equity stakes in critical minerals companies, a White House official said on Thursday (Dec 4), calling the once-rare move necessary to counter China’s dominance in the raw materials used in everything from semiconductors to MRI machines.

“I think they are the norm from our perspective,” said Jarrod Agen, executive director of the National Energy Dominance Council, speaking at a forum in Washington. “There is a broad scope of different companies who are coming to us. They are making the right case.”

Critical minerals such as gallium and cobalt are used in products ranging from iPhones to industrial magnets. They are also vital for defence systems, including missile guidance, radar and jet engines, as well as batteries and other technologies needed to cut carbon pollution.

Over the past year, the Trump administration has spent over US$1 billion to take stakes in critical minerals and mining companies, often sending the company’s stock prices soaring.

Among the deals are US$400 million in exchange for a 15 per cent stake in MP Materials which was announced in July, US$670 million in exchange for a stake in magnet producer Vulcan Elements and US$35.6 million for a 10 per cent stake in Canadian minerals explorer Trilogy Metals.

The Trump administration announced in September it was acquiring a stake in Lithium Americas, which is developing the largest lithium deposit in the country, as part of a deal to restructure an existing US$2.2 billion loan the Canadian company held with the Energy Department.

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Agen, in a brief interview, declined to specify what company could be next.

The strategy of investing taxpayer dollars in companies the administration has deemed essential to national security comes as the US’ reliance on China for the crucial materials has become a flash point in the trade war. Beijing responded to US export restrictions by curbing shipments of rare-earth elements, a move that briefly disrupted global supplies before China eased the limits after Washington lifted its countermeasures.

“We are literally buying equity, getting equity in companies to give the backing of the US, because that’s the only way we are going to catch up with China on these things,” Agen said in his remarks at the American Growth Summit, which was sponsored by companies such as Citigroup and Nvidia Corporation. “They know the government is backing us. No one wants to mess with President Trump, and so we can actually get the materials.” BLOOMBERG