Washington has poured billions into domestic critical minerals and battery projects, including a $1.4 billion Pentagon loan to silicon-anode maker Sila Nanotechnologies. Yet China still controls roughly 60% of critical-mineral mining and more than 90% of processing for materials like rare earths, graphite and gallium, a lead one industry executive says will take years for the U.S. to close.
Washington bets big on new suppliers
President Donald Trump has launched the most aggressive federal push into critical minerals and rare earths since returning to office, announcing a flurry of equity and debt deals with dozens of rare earths companies. MP Materials and U.S. Rare Earths rank among the top beneficiaries. Last month, Trump unveiled a $3 billion federal investment in critical minerals projects across the country, aimed at scaling domestic production and cutting reliance on Chinese battery supply chains.
The centerpiece of that push is a $1.4 billion conditional loan from the Pentagon's Office of Strategic Capital to Sila Nanotechnologies. The California startup makes Titan Silicon, a silicon-carbon anode material built as a drop-in replacement for graphite, promising up to a 40% increase in energy density. Sila began commercial-scale production in late 2025, and its Moses Lake plant is designed to supply enough material for 20,000 to 50,000 electric vehicles a year.
A rival extraction method emerges
Utah-based Lilac Solutions is also chasing an alternative supply chain, deploying Direct Lithium Extraction technology that pulls lithium from brine. The process takes one day instead of two years. It recovers roughly double the lithium while using 99% less land and significantly less water than traditional evaporation-pond mining. Lilac's CEO, Raef Sully, told CNBC the technology sidesteps the processing bottleneck that China currently controls.
China's lead remains hard to close
But these efforts confront decades of Chinese state subsidies and infrastructure financing through initiatives such as the Belt and Road Initiative. China now accounts for roughly 60% of global critical minerals mining. It also handles more than 90% of the refining and processing of materials like rare earths, graphite and gallium. The IEA's Global Critical Minerals Outlook 2025 found China is the leading refiner for 19 of the 20 most important strategic minerals, with an average market share of 70%.
That scale extends into batteries. According to the IEA, China makes 80% of the world's battery cells, more than 90% of anode active material and about 85% of EV battery cathode active material. Tu Le, founder of Sino Auto Insights, told CNBC: "We have five, six, seven years to try to become competitive."
Policy shifts undercut demand at home
Meanwhile, other Trump administration policies are working against the sector he is trying to build. After the administration eliminated the $7,500 federal EV tax credit and rolled back fuel economy standards, U.S. EV sales fell 27% year-over-year in Q1 2026, the second straight quarter of declines. A shrinking domestic EV market weakens the demand base that battery materials startups need to scale.
Source: Oilprice.com
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