Trump Weighs Using $2 Billion in CHIPS Act Funding for Critical Minerals
The Trump administration is considering a plan to reallocate at least $2 billion from the CHIPS Act to fund critical minerals projects and boost Commerce Secretary Howard Lutnick’s influence over the strategic sector, two sources familiar with the matter told Reuters.
The proposed move would take from funds already allocated by Congress for semiconductor research and chip factory construction, avoiding a fresh spending request as it seeks to reduce US dependence on China for critical minerals used widely in the electronics and defense industries.
Boosting Lutnick’s role over critical minerals financing would also help centralize the administration’s approach to the sector, a push sought by White House officials after the rollout of the Pentagon investment in rare earths company MP Materials last month sparked questions about the US government’s minerals strategy, one source said.
The White House did not respond to requests for comment. Pentagon officials were not immediately available to comment. MP Materials declined to comment.
The Commerce Department oversees the $52.7 billion CHIPS Act, formally known as the CHIPS and Science Act. The act, signed into law by then-President Joe Biden in 2022, has provided funding so far for research while also seeking to lure chip production away from Asia and boost American domestic semiconductor production.
But since taking office in January, Trump has moved to change the CHIPS Act – legislation he has called “a horrible, horrible thing” that amounts to a giveaway to companies – largely by renegotiating grants to chipmakers.
Repurposing some funds for mining-related projects would align in part with the spirit of the CHIPS Act as the semiconductor industry requires abundant supplies of germanium, gallium and other critical minerals over which China has tightened its market control, said the sources, who are not permitted to speak publicly about the deliberations.
“The administration is creatively trying to find ways to fund the critical minerals sector,” said the first source. The plans are under discussion and could change, the sources added.
Mining companies themselves could benefit, but also processing and recycling firms. Most of the minerals considered critical by the US government are not processed inside the country.
Kent Masters, CEO of North Carolina-based Albemarle, the world’s largest producer of lithium for rechargeable batteries, told Reuters last month that the company’s stalled plans to build a US lithium refinery are “difficult now without some type of government support or partnership.”
It was not immediately clear if the Trump administration aimed to use the funds for grants or equity stakes in mining companies, but Lutnick aims to “get the $2 billion out the door” as soon as possible, the first source said, adding that the administration aims to find other funds to reallocate in the near future.
A former US official said the Biden administration considered using CHIPS Act grants for rare earths but decided it was uneconomical, required many environmental exemptions and was best left for the Department of Energy to handle.
The administration is also looking to use CHIPS Act-related funding to take equity stakes in Intel and other chip makers in exchange for cash grants, Reuters reported on Tuesday.
Trump moved quickly to expand US critical minerals production since taking office in January by signing executive orders to boost deep-sea mining and domestic projects.
On Tuesday he met with the CEOs of Rio Tinto and BHP at the White House despite the ongoing negotiations with European leaders over Russia’s invasion of Ukraine, a move aimed at underscoring his support for US mining.
The CHIPS Act deliberations come after the Energy Department last week proposed $1 billion in spending for some critical minerals projects, with funds tied to the 2021 Bipartisan Infrastructure Law.
Lutnick
The White House aims to give Lutnick a greater role over funding decisions for critical minerals by giving him oversight of the decision making process within the administration, the sources said.
The Pentagon’s multibillion-dollar investment in MP Materials and its move to extend a price support mechanism – a deal negotiated by Deputy Defense Secretary Steve Feinberg – was seen by White House Chief of Staff Susie Wiles as uncoordinated as it sparked confusion over whether Washington would guarantee a price floor for all miners and forced the administration to clarify that it does not intend for MP to have a rare earths monopoly, the two sources said.
Much of the funding for MP’s deal – including Washington’s equity stake, loans and purchase agreements – still needs to be allocated by Congress.
Two weeks after the Pentagon announced its MP investment, administration officials rushed to meet at the White House with rare earths firms and their customers to underscore broad support for the entire sector, Reuters reported.
Lutnick will now help coordinate the administration’s funding decisions, taking the lead from the Pentagon and other agencies, the sources said.
Lutnick ran brokerage firm Cantor Fitzgerald before he joined Trump’s cabinet. Cantor is a large shareholder in Critical Metals Corp, which Reuters reported in June is under consideration for a loan from the US Export-Import Bank.
