Trump Administration Eyes Repurposing Chip Act Funds for Critical Minerals

The Trump administration is considering a plan to reallocate at least $2 billion from the CHIPS Act to fund critical mineral projects, according to sources familiar with the matter. This move aims to elevate the influence of Commerce Secretary Lutnick over this increasingly important strategic industry. The proposed shift would draw funds originally earmarked by Congress for semiconductor research and chip factory construction. These critical minerals are widely used in electronics and defense industries. The move also aims to centralize the current administration's management of this sector, particularly after the Pentagon's investment in MP Materials raised questions about the US government's mineral strategy, prompting White House officials to seek more centralized management. The US Department of Commerce oversees the $52.7 billion CHIPS and Science Act. Signed into law in 2022 by then-President Biden, the act has provided funding for research and aims to bring chip production back to the country and boost domestic semiconductor manufacturing. However, since taking office in January, Trump has moved to alter the CHIPS Act, primarily through renegotiating grants to chipmakers. He has called the legislation a "terrible thing," equivalent to giving handouts to companies. According to sources, reallocating some funds to mining-related projects would partially align with the CHIPS Act, as the semiconductor industry requires significant amounts of germanium, gallium, and other critical minerals. "The current administration is creatively trying to find ways to fund the critical minerals sector," a source stated. The source added that these plans are under discussion and could change. Mining companies, as well as processing and recycling firms, are likely to benefit from this shift. The US government believes most critical minerals are not processed domestically. Kent Masters, CEO of Albemarle, the world's largest lithium producer for rechargeable batteries, based in North Carolina, reported last month that the company's plans to build a lithium refinery in the US have stalled, stating that "it's difficult to make happen now without some form of government support or partnership." It's unclear whether the Trump administration intends to use the funds in the form of grants or equity stakes in mining companies, but the source mentioned that Lutnick's goal is to "get that $2 billion out the door as soon as possible," adding that the government aims to find other funds for reallocation in the near future. A former US official said that the Biden administration considered using CHIPS Act allocations for rare earth minerals but deemed it uneconomical, requiring numerous environmental waivers, and best left to the Department of Energy. Earlier, the Trump administration also sought to use funds related to the CHIPS Act to invest in Intel and other chipmakers in exchange for cash grants. Since taking office in January, Trump has acted swiftly to expand US critical mineral production by signing executive orders to promote deep-sea mining and domestic projects. On Tuesday, despite ongoing negotiations with European leaders regarding the Russia-Ukraine conflict, he met with the CEOs of Rio Tinto and BHP at the White House, a move intended to underscore his support for the US mining industry. Amidst deliberations over the CHIPS Act, the Department of Energy last week proposed spending $1 billion on some critical mineral projects, with the funds linked to the 2021 Bipartisan Infrastructure Law. ### Lutnick's Role Sources indicate that the White House aims for Lutnick to play a more significant role in critical mineral funding decisions by allowing him to oversee the decision-making process within the government. According to sources, the Pentagon's multi-billion dollar investment in MP Materials and the extension of its price support mechanism was viewed by White House Chief of Staff Susie Wiles as "uncoordinated" because it raised confusion about whether Washington would guarantee price floors for all miners and forced the government to clarify that it did not intend to allow MP to monopolize rare earth minerals. Most of the funds for the MP deal, including Washington’s equity stake, loans, and procurement agreements, still need to be allocated by Congress. Government officials reportedly rushed to meet with rare earth companies and their customers at the White House two weeks after the Pentagon announced its investment in MP, to emphasize broad support for the entire industry. Sources state that Lutnick will now help coordinate government funding decisions, taking the lead from the Pentagon and other agencies. Prior to joining the Trump administration, Lutnick ran brokerage firm Cantor Fitzgerald, a major shareholder in Critical Metals Corp, which was reportedly being considered for a loan from the US Export-Import Bank in June.