US to Establish $5 Billion Critical Minerals Investment Fund
US negotiating a $5bn fund with Orion and DFC to secure critical minerals and shore up supply chains.
The United States is advancing plans to establish a $5 billion investment fund dedicated to securing critical mineral supply chains. This initiative, a joint effort between the US International Development Finance Corporation (DFC) and New York-based investment firm Orion Resource Partners, represents a significant step in addressing vulnerabilities in the global supply of minerals vital to advanced technologies and national security.
A Strategic Approach to Critical Mineral Security
The proposed fund will focus on projects across the critical mineral supply chain, from exploration and mining to processing and refining. Key priorities include minerals essential for electrification, renewable energy, and defense technologies, such as lithium, cobalt, nickel, and rare earth elements.
The fund is expected to operate as a public-private partnership, with the DFC and Orion Resource Partners contributing equal amounts toward the $5 billion total investment. This structure mirrors Orion's earlier $1.2 billion collaboration with Abu Dhabi's sovereign wealth fund, ADQ, highlighting the growing role of such partnerships in advancing mineral security.
The Growing Importance of Critical Minerals
Securing access to critical minerals has become a national security priority for the United States. Concerns stem from two key challenges: China's dominance in mineral processing and the long-term supply deficits projected for numerous metals. China currently processes the majority of many critical minerals, while global production faces obstacles such as declining ore grades and lengthy permitting processes.
Critical minerals underpin technologies essential for economic competitiveness and defense. These materials play a pivotal role in electric vehicle batteries, semiconductor production, and renewable energy systems, as well as in defense applications like aircraft and missile guidance systems. In response, the Department of Defense recently launched its first tender to stockpile cobalt since the Cold War ended, reflecting the urgency of securing reliable supplies.
Geographic Focus: Investing in Resource-Rich Regions
The fund's activities are expected to target key regions for mineral investment, including:
The Democratic Republic of Congo, which produces around 70% of the world's cobalt.
Ukraine, where mineral deals have been discussed.
Greenland, identified for its strategic mineral resources.
Allied nations such as Australia, Canada, and Latin America, underlining a focus on fostering partnerships in resource-rich, friendly countries.
These geographic priorities align with strategic efforts to reduce reliance on Chinese investment in critical mineral production and processing.’
Leveraging Private Expertise for Public Goals
Orion Resource Partners, with $8 billion in assets under management, brings significant expertise to the partnership. As a leading private investor in the mining sector, Orion offers technical knowledge, industry relationships, and financial capacity that complement the DFC's strategic objectives. Oskar Lewnowski, CEO of Orion, has previously urged governments to emulate China's approach by building strategic stockpiles to mitigate supply disruptions.
The collaboration is also expected to attract additional private capital through co-investment opportunities, further accelerating the development of critical mineral projects.
Broader Impacts on Global Markets
The establishment of this $5 billion fund could reshape the global critical minerals landscape. Increased investment in exploration, mining, and processing infrastructure could accelerate project timelines, stabilize prices, and enhance supply chain resilience. Additionally, the fund’s focus on environmentally and socially responsible projects may raise industry standards worldwide.
Mining analysts predict the partnership could reduce barriers for mid-tier companies and redirect investment toward projects with strategic significance rather than purely financial returns. This approach would also support the development of alternative supply chains, lessening reliance on Chinese processing facilities.
A Comprehensive U.S. Strategy for Resource Security
The DFC’s partnership with Orion is part of a broader U.S. strategy to enhance critical mineral security. Recent investments by the Department of Defense in stockpiling cobalt and supporting rare-earth production, such as its $400 million investment in MP Materials, reflect a whole-of-government approach to addressing these challenges.
The administration is also seeking to expand the DFC’s investment capacity, positioning it as a counterweight to initiatives like China’s Belt and Road. Ben Black, nominated to lead the DFC, emphasized during his confirmation hearing the importance of leveraging private capital for strategic purposes, stating that the agency "should never be crowding out private capital."
Conclusion
The creation of a $5 billion critical minerals investment fund signals a significant evolution in the United States' approach to resource security. By combining public and private resources, the initiative aims to secure vital supply chains, reduce vulnerabilities, and ensure technological and economic competitiveness. As geopolitical and environmental dynamics continue to shape the global minerals market, this partnership represents a pivotal step toward a more secure and sustainable future.