The Trump administration needs to strike multiple deals with U.S. miners to secure the nation's supply chain against China, said Mark Chalmers, CEO of Energy Fuels, a miner focused on uranium and rare earth minerals.
The Pentagon decision to take an equity stake in MP Materials, the largest U.S. rare earth miner, in July and support the company with a price floor surprised many in the industry, Chalmers told CNBC.
But it was a necessary step that the White House should now follow with more deals to diversify the U.S. supply chain and reduce the risk that would come with backing a single national champion, the CEO said.
“One company doesn't fix it,” Chalmers said of the MP Materials deal. “You have to have multiple deals to ensure that you don't just have the company risk, because all companies aren't going to deliver.”
The White House is “not ruling out other deals with equity stakes or price floors as we did with MP Materials, but that doesn't mean every initiative we take would be in the shape of the MP deal,” a Trump administration official told CNBC.
Rare earths are key inputs in weapons platforms such as the F-35 warplane as well as consumer products like electric vehicles and smartphones. The U.S. is almost entirely dependent on China, which supplied 70% of rare earth imports in 2023, according to the U.S. Geological Survey.
China has manipulated the market by suppressing prices to drive Western competition from the market, said Ryan Castilloux, founder of Adamas Intelligence, a critical mineral market research firm. The MP deal demonstrated that the U.S. is willing to break with free market ideals and push back against China by mimicking its model of strategic capitalism when necessary, Castilloux said.
“We've seen just how disadvantaged the free market view is versus a long term, industrial policy driven market — and something needed to give,” Castilloux, an expert on critical minerals, told CNBC.
Possible rare earth targets
Energy Fuels' stock has surged nearly 200% since the MP deal on July 10, as investors speculate that it could be a deal target for the Trump administration. Critical mineral miner NioCorp Developments is also up almost 200%, Ramaco Resources has gained 140%, and USA Rare Earth is up more than 70%.
MP Materials will likely need more heavy rare earths as it develops a second facility to make magnets under the Defense Department deal, Castilloux said. Heavy rare earths are needed to produce magnets that can withstand high temperatures in EV motors and defense industry applications, he said.
Headquartered in Denver, Energy Fuels is the largest uranium miner in the U.S. and is forming a rare earth operation through mines it has acquired around the world. Its operation will produce heavy rare earths, Chalmers said.
Energy Fuels is focused on “providing a product that is attractive to the U.S government” and complements the strengths of MP Materials, the CEO said.
“The government cannot bet on one horse — it just doesn't make sense,” Chalmers said. “We spend a lot of time in D.C. making sure they understand the merits of our strategy,” he said.
Trump eyes lithium
Other critical minerals like lithium, cobalt and graphite are ripe for federal investment to smooth out volatile price fluctuations that undermine U.S. miners, said Rich Nolan, CEO of the National Mining Association. Those minerals are all used in batteries, among other applications.
The Trump administration has proposed an equity stake in Lithium Americas, as the Canadian company renegotiates the terms of a $2.2 billion loan from the Department of Energy for its Thacker Pass mine in northern Nevada. The mine is expected to become one of the largest sources of lithium in North America, with the first phase of the project scheduled to start operations in late 2027.
Lithium Americas stock surged more than 90% this week on news of the potential government stake.
Albemarle CEO Kent Masters told CNBC that something “in the ballpark” of the MP deal could apply to the lithium sector. Albemarle, headquartered in Charlotte, North Carolina, is one of the largest lithium producers in the world.
“What you want to do is move the market such that private industry can invest behind it,” Masters told CNBC in July, pointing to Apple‘s offtake agreement with MP just days after the Defense Department deal.
Miners seek price floors
While it might take a government equity stake to move the market in some cases, the price floor established by the Pentagon in the MP deal is the “critical part” that allows private industry to invest and build out the supply chain, Masters said.
Price support from the federal government “sends a true market signal that these investments are long term, that they are here to stay,” the National Mining Association's Nolan said.
Under the MP deal, the Pentagon set a price floor of $110 per kilogram for neodymium-praseodymium oxide, or NdPr, a key input in rare-earth magnets. The government pays MP the difference when the market price is below $110 but in turn takes 30% of the upside when the price is above $110.
The price of NdPr surged 40% in the wake of the MP deal, Castilloux said.
“It serves as a blueprint for any market where suppressed pricing is slanting the competitive playing field against the U.S. and its allies,” the analyst said of the price floor. The deal signals that “there is a way to break free of China's artificially suppressed pricing,” he said.
