What is the goal of the critical minerals executive order signed by President Trump on March 20, 2025?
The order[1] aims to significantly increase domestic production of critical minerals within the United States. It mandates fast-tracking permitting, using federal lands for mining, deploying public capital (including through the Defense Production Act), and coordinating with industry to identify and support investment-ready projects in the short term. The executive order seeks to accelerate production of critical minerals in the United States to diversify supply chains and reduce current reliance on China.
What are the main measures in the order?
The order looks for several actions that should be taken within the next few weeks, including:
- Identifying and fast-tracking priority mining projects.
- Prioritizing mineral production on federal lands.
- Mobilizing public capital via the Department of Defense, Development Finance Corporation, and Export-Import Bank.
- Establishing mineral-focused investment funds and leasing programs.
- Creating a federal mechanism to convene buyers and secure offtake agreements for US projects.
Why is the president delegating Defense Production Act (DPA) authority to the Secretary of Defense?
By putting the Department of Defense (DOD) in charge, the administration is treating the energy emergency as a national security issue, similar to wartime production efforts. The president is transferring his authority under Section 303 of the Defense Production Act (DPA) (50 U.S.C. 4533) to the Secretary of Defense to expedite and control the supply of critical materials, including critical minerals. Giving this authority to the DOD means that the Pentagon, in theory, can fund or direct production of essential materials for national security, issue contracts and purchase guarantees to ensure supply, compel companies to prioritize government orders over commercial sales, streamline approvals, and reduce bureaucratic delays.
Why is permitting such a big focus?
Permitting timelines are one of the biggest bottlenecks for new mining projects in the United States and often stretch over a decade. While the increase in permitting times is a global phenomenon, lead times in the United States are among the highest in the world.[2] The order’s requirement for agencies to identify projects that can be “immediately approved.” The intention is not too dissimilar from the EU’s strategy to identify “strategic projects” that would get accelerated permitting. While this could be welcome news to the industry, permitting delays are only part of the challenge in efforts to get new mining and processing projects funded. Even with faster approvals, the litigation-prone nature of the US legal system means projects can still face years-long delays due to lawsuits.[3]
Does the executive order address Indigenous communities or local engagement?
The executive order does not mention Indigenous communities, and this could create a problem as failing to involve these communities early and equitably can result in project delays, litigation, or complete shutdowns. Today, two-thirds of litigation cases in clean energy value chains are in the mining sector.[4]
Can the executive order unlock investment for new mining projects on a large scale?
It could help, but it does not fundamentally change the core issue: mining is capital-intensive, and many minerals currently trade at prices too low to justify large new investments. Greenfield mining projects often cost over $1 billion for the construction of the mines, with mega-projects often costing several billions, and current prices for many critical minerals (e.g., lithium, nickel, cobalt) are far below historical peaks. The executive order tries to address this through public investment, in part by establishing a fund and by enabling offtake contracts.
How would the new fund work?
Funding for the proposed critical minerals production fund would primarily come from the Defense Production Act Fund, which in 2024 allocated funding in the ballpark of $700 million.[5] For this executive order, the effective budget ceiling for mineral investments under the DPA will depend on how much Congress continues to allocate to these defense-related funding streams. The DOD is only able to fund projects up to $50 million with only congressional notification, otherwise congressional approval is needed.[6] The EO highlights that more support may come from the Department of Defense’s Office of Strategic Capital (OSC), which doesn’t have a standalone budget but channels funds through DOD appropriations for strategic investments. The executive order foresees that the US International Development Finance Corporation (DFC) will act as the executing agency for these domestic investments, reimbursed via DOD transfers. While the DFC has a $60 billion global investment cap, this order relies on DOD funding rather than the DFC’s core budget. All in all, this can contribute to strategic projects, but it is again important to note that such projects are so immensely capital-intensive that this type of funding alone would not likely be sufficient to solve the financing equation. For example, the Resolution Copper project in Arizona has already spent $2 billion for the development and permitting of the project without having started production yet.[7]
What does the executive order do to guarantee a buyer for minerals produced and processed in the United States?
The government seeks to convene buyers and work with them to issue requests for bids for mineral supplies. While this is important, it is not clear whether the steps will effectively link suppliers with off-takers. Offtake contracts have been essential to unlocking financing. Without them, investors may remain wary because market fundamentals will still likely remain critical factors. Price volatility, long lead times, and uncertain demand all make investment in greenfield projects risky, and that is unlikely to change overnight.
Is this a purely domestic focus? What about partnerships abroad?
This executive order only emphasizes domestic production. While this makes political sense, it ignores the value of co-financing mining in allied countries. For example, the previous administration used the Defense Production Act to support Canadian projects, and the Canadian government also co-invested. These kinds of cross-border, multi-country investments help to spread risk and help tap into cost-competitive resources. However, the current framing is one of “domestic versus foreign” which can make supply diversification end up more expensive than if the United States were to work with allies.
Is the executive order specific about who is responsible for what actions?
Yes. First, the order places a focus on the Department of Defense, the US International Development Finance Corporation and the Export-Import Bank (Exim). These institutions can play a strong role in financing projects and providing guarantees that de-risk investment in critical minerals, domestically and abroad. There is a clear allocation of responsibility to high-level decision-makers which may help the process, and the White House’s direct involvement here is perhaps the most important factor. In previous years, coordination across agencies has been lacking, except when China implemented export restrictions. This EO allocates responsibilities across US government agencies. Additionally, a dedicated Minerals Czar could be created to further improve cross-government coordination and execution. There is also a smart focus on identifying priority projects. Rather than attempting to overhaul an outdated regulatory framework (e.g., the 1872 Mining Law) quickly, the EO seeks to identify a pipeline of strategic projects that should be accelerated in the short term. This pipeline approach is pragmatic and could have an immediate impact while allowing for more fundamental regulatory reforms to be passed in the coming months and years.
How could the government strengthen the regulatory framework further?
While the executive order is ambitious and takes steps to address permitting and public capital issues, it could be deepened to address other issues that are needed to really diversify critical minerals supply chains, including by:
- Setting up a strategy for Indigenous inclusion and benefit-sharing mechanisms to build trust.
- Allocating responsibility for devising a strategy for price volatility, which undermines investor confidence. While commodity prices move and are subject to cycles, some pricing may be influenced by predatory practices such as the dumping of minerals on world markets. This could potentially be mitigated by well-developed mechanisms that provide floor pricing support during such events.
- Improving engagement with global supply chains, especially in allied countries where production might be more viable and where the cost curve may be more competitive.
- Allocating responsibility to look at environmental, social, and governance standards and responsible mining practices, specifically to differentiate “good” from “bad” actors in trade policy. The worst offenders could have their market access removed, for example.
[1] https://www.whitehouse.gov/presidential-actions/2025/03/immediate-measures-to-increase-american-mineral-production/
[2] https://press.spglobal.com/2024-07-18-United-States-Ranks-Next-to-Last-in-Development-Time-for-New-Mines-that-Produce-Critical-Minerals-for-Energy-Transition,-S-P-Global-Finds
[3] https://www.burfordcapital.com/insights-news-events/insights-research/research-litigation-challenges-mining-industry/
[4] https://www.business-humanrights.org/en/from-us/briefings/unjust-transition-on-trial-communities-and-workers-litigate-to-shape-corporate-practice/
[5] https://iconnect007.com/article/140479/big-win-for-defense-production-act-budget-allocation-in-fy24-budget/140476/milaero
[6] https://www.congress.gov/118/meeting/house/116950/witnesses/HMTG-118-BA10-Wstate-NicastroL-20240312.pdf
[7] https://resolutioncopper.com/project-overview/#:~:text=To%20date%2C%20project%20partners,Copper%20project.&text=by%20Rio%20Tinto%20and,Copper%20project.&text=BHP%29%20have%20spent%20over,Copper%20project.&text=to%20develop%20and%20permit,Copper%20project.
