The Trump administration is looking at adopting a tool more familiar to Wall Street than Washington, as it seeks equity holdings in producers of critical minerals to bolster supply chains deemed essential to national security.
More than a dozen Australian mining firms earlier this month held meetings in Washington with officials from various agencies, and were told that the administration is looking for ways to take equity-like stakes in companies, according to people familiar with the talks.
While discussions didn’t focus on specific deals, they did cover financial techniques that the administration could use. Some of the officials said the government is interested in acquiring warrants granting it the right to buy shares in firms, according to the people.
One forum was hosted by Australian Ambassador Kevin Rudd and attended by high-level Trump officials who drive the administration’s policy on critical minerals, according to people familiar with the event. Those officials included David Copley, senior director for global supply chains at the National Security Council; Joshua Kroon of the Commerce Department; and John P. Gallagher, the deputy chief of staff of Deputy Secretary of Defense Steve Feinberg.
The message communicated to the mining firms shows how far President Donald Trump’s administration is willing to go in deploying tools seldom used by the government to build a domestic supply chain for minerals vital in defense and other industries, amid concern China has a stranglehold on some of them.
It also bolsters the idea that the Pentagon’s unprecedented purchase of a $400 million stake in rare earth producer MP Materials Corp. earlier this year is a blueprint for future deals, employing tools typically used by financiers.
That acquisition was led by Feinberg, a private equity billionaire who co-founded Cerberus Capital Management. Gallagher is a former Cerberus employee handpicked for a Pentagon advisory role on critical minerals by Feinberg.
Gallagher, Kroon and Copley did not respond to requests for comment.
“The Trump Administration is keeping all options open to accomplish this America First goal while guaranteeing a good bargain for American taxpayers,” White House Spokeswoman Taylor Rogers said in a statement. “A priority of President Trump’s energy dominance agenda is to build the strongest mining sector in the world and boost the production of critical minerals which will strengthen our economic and national security.”
Trump is embracing an interventionist role in the economy to shore up strategic industries as the great-power rivalry with China intensifies. His administration is already taking a 10% stake in Intel Corp., and a so-called golden share in United States Steel Corp.
Critical minerals are another top priority in the campaign. China rattled the US earlier this year when it imposed export controls for rare earths and so-called permanent magnets, some of which are vital for defense applications. Trade tensions have eased since then, but many American firms are still complaining that Chinese mineral imports are arriving at a snail’s pace.
While the use of warrant options by Uncle Sam would be unusual, it’s not unprecedented. The federal government took warrants to buy airline stock at the height of the pandemic, for example. But legal analysts say such moves have typically formed part of temporary bailout programs for industries hit by some kind of crisis.
The warrants – effectively an option for the holder to purchase a company’s equity – could offer a way for the government to make a profit without having to put up cash. Warrants are also a way to protect taxpayer money against some of the risk the government may take on in deals.
The meetings with foreign companies further show a willingness by the administration to invest overseas.
The talks offered officials an opportunity for fact-finding and a platform to convey to the industry what they’re looking for, the people said.
The backdrop is that some companies in the field have been struggling to figure out which government agencies they should be dealing with. While the Trump administration has revived Biden-era efforts to create a fully domestic supply chain for rare earth magnets, it’s not always clear to everyone — from miners to processors or magnet producers — who is navigating the policy.
In some cases, it’s the Pentagon, as illustrated by the MP Materials deal. In others, the White House has held direct talks with stakeholders, like when officials met in July with technology and recycling companies to discuss ways to quickly ramp up production of permanent magnets using rare earth elements.
(By Joe Deaux)
Source: Trump team eyes Wall Street tool to add clout in critical minerals
