Why US critical minerals money should survive a change in Congress

If you hold critical minerals stocks, the midterm result probably made you nervous. A Democratic-controlled Congress could, in theory, turn off the tap that has been funding US mines, refineries and stockpiles. The people who actually help companies win that money don't think it will.

What the advisers said

Steve Empedocles and VJ Sahi run Clark Street Associates, a Washington and Silicon Valley firm that says it has secured more than US$5.4 billion in government funding for its clients. Speaking to MINING.COM, their argument came down to three points.

• The money is already there. Funds from earlier budget legislation are still largely unspent, and the administration can keep doing deals with them without a new bill.
• National security cuts across party lines. Reducing reliance on Chinese supply has support on both sides, and the annual defence authorisation bill remains the main vehicle for minerals policy.
• Expect scrutiny, not cuts. Congress is likely to ask harder questions about how recipients were chosen and how deals were structured. Empedocles does not expect that to slow investment for at least a couple of years.

The money is still moving. The week before the interview, the Defense Logistics Agency committed US$2 billion to buy strategic materials for the national stockpile this fiscal year.

Why it matters for Canada

Despite the friction between Washington and Ottawa, both advisers see Canadian miners and US processors as natural partners. The weakest link, Sahi said, is refining and processing, and nobody has settled where that capacity should be built. There is precedent for cross-border support: in 2024 the Pentagon gave US$14.7 million in Defense Production Act awards to two Canadian companies, Fortune Minerals and Lomiko Metals.

Add a deadline. From 1 January 2027, US defence contractors are meant to stop buying rare earths, magnets and tungsten from China, Russia, Iran and North Korea, according to Fortune. Waivers have been granted repeatedly because domestic supply is short, but the rule keeps up the pressure to build alternatives.

What we're watching

The first oversight hearings in the new Congress, the next defence authorisation bill, and whether Canadian processing and recycling companies start winning US funding. One caution: political support for a sector is not the same as support for any one company. Funding decisions will get more scrutiny, and weak projects are more likely to be the ones that miss out.