China Bowled Underarm, So America Rewrote The Rules

Yesterday I told you something big was brewing in US critical minerals policy.

By way of analogy, imagine yourself at the MCG, February 1981.

New Zealand needed six runs off the final ball, so Greg Chappell told his brother Trevor to roll the thing along the ground.

Perfectly legal, a diabolical lightning bolt of genius…totally infuriating.

Cricket rewrote those rules so this wouldn’t happen again.

That is roughly where America finds itself with China and critical minerals.

Source: NFSA

They read the rulebook better than we did

For two decades the West assumed the free market would sort out critical minerals supply.

China was using the system to its advantage.

Beijing built refining and magnet capacity at enormous scale, ran it on wafer-thin (or negative) margins…

And effectively priced everyone else out.

This is not a simplistic “China bad” argument.

You must admire the geostrategic nous of it all.

They worked out that the rules of globalisation had a gap in them, then played a twenty-year innings through that gap while the rest of us obsessed over the tech mega-caps.

And yes, the Chinese state used an open market as opportunity to use critical minerals and battery tech companies as instruments of national policy.

Imagine going for a swing when you know the underarm is coming.

That’s effectively what it’s felt like to the many critical minerals company directors I’ve talked to over the years.

They needed the US to get serious, which didn’t happen overnight.

The US is moving quickly now.

The last six months shows that.

The moves in this space started in earnest in April 2025, Beijing tightened export controls on dysprosium, terbium, other heavy rare earths and finished magnets.

So this is what the US is doing about it.

Washington is now on the share register

The US government is now a shareholder in these types of companies.

The template landed in July last year.

The Pentagon tipped US$400 million of preferred equity into MP Materials, America’s only integrated rare earth miner and processor.

That’s in California (remarkably) a state I know well, which has struggled to support its extractive industries — if at all.

That $400 million bought the Department of Defense roughly 15% of the company, plus a guaranteed floor price on neodymium-praseodymium (NdPr) oxide of US$110 a kilogram and a ten-year purchase commitment behind it.

The floor sat at more than double the going market price on the day of signing.

Then it happened again.

In January, the Department of Commerce put up to US$1.3 billion of loans and US$277 million of grants behind USA Rare Earth, and took millions of shares and warrants to boot.

That works out at somewhere between 8% and 16% of the company.

The US Government has taken a similar position in Lithium Americas, around 5% of the parent company plus another 5% at the project level.

The pressure release valve

Six deals by my count, most within the last six months.

The ramp up is real.

Across five weeks in June alone, Washington committed close to US$2.9 billion of direct federal money across seven separate rare earth transactions.

The US Army also agreed to let four critical minerals processors build plants on active military bases, which has never happened before.

An executive order in July then made life much harder for defence contractors still buying critical materials from China.

Then there is Project Vault, a US$12 billion strategic minerals stockpile funded by the largest single loan in the history of the US Export-Import Bank.

It covers all 60 minerals on the American critical list.

At the same February event that announced Vault, 54 nations and the EU launched FORGE, which the US Vice President calls a preferential trade zone with enforceable price floors.

Australia is a founding member.

Put all of that together and you get a pressure release valve.

If the allies can stand up their own processing capacity behind guaranteed prices, Chinese export controls lose their potency.

But it will take time, and serious capital is yet to be fully allocated to the effort.

Which brings me back to us

Australia sits at the centre of this whole arrangement.

In April, our Resources Minister and the US Interior Secretary confirmed more than $5 billion of combined support for Australian critical minerals projects.

The named projects run across rare earths, nickel, cobalt, gallium, magnesium, vanadium, graphite and tungsten.

Price floors make projects viable far quicker than a slow burn 5-year commodity cycle.

The biggest risk in any junior mining story is that the commodity price falls over before the plant gets built.

This is the offshore tailwind I was alluding to yesterday, and for the last 8 months or so, to be fair.

I do not think it’s hyperbole to say these companies will shape what humanity gets to build over the next fifty years.

Tomorrow, more on the demand picture.