Anxiety is growing on both sides of the aisle on Capitol Hill as the Trump administration invests in more private companies, including a slew of mineral producers, fueling questions about oversight among free-market Republicans and Democrats alike.
“I hate it,” Sen. Thom Tillis (R-N.C.) told reporters on Capitol Hill on Thursday. “I didn’t like the U.S. Steel stake. I didn’t like the Intel stake. I think that I’m a big supporter and lifelong laissez-faire economic sort of person. Let the private market operate.”
Tillis, a member of the Senate Finance and Banking committees, is the latest Republican to push back on the White House’s foray into private ownership of companies for national security purposes, a rare move that’s also raising eyebrows in the private sector. Tillis questioned how any free-market conservatives could reconcile the idea of taking private ownership of a company.
“I think it’s bad,” the senator continued. “I mean, does anybody really believe, if you take a 10 percent stake in a company, that any of the other shareholders really matter if you’ve got the weight of the U.S. government [behind it]?”
When asked about the growing bipartisan angst, the White House highlighted the need for urgent action to bolster the mineral sector. The departments of Defense and Treasury did not immediately respond when asked for comment.
“If business-as-usual policies worked, America would not be reliant on foreign countries for critical minerals, semiconductors, and other products that are key for our national and economic security,” said White House spokesperson Kush Desai.
“The administration’s targeted equity stakes ensure that taxpayers get a good bargain and that the ball meaningfully moves forward to encourage further investment by the private sector,” Desai said.
DOE spokesperson Ben Dietderich in an email said the administration is taking “bold” action to ensure the nation is no longer dependent on foreign nations for the critical materials essential for the economy and national security. “By maintaining equity ownership in critical mineral projects, the administration is making better deals for the American taxpayer and ensuring these projects reach completion,” Dietderich said.
Trump officials have repeatedly said their focus is on national security and jump-starting a domestic mining and processing sector to pump out critical minerals and reduce U.S. reliance on China. They’ve also emphasized that taking private equity stakes is part of a broad suite of tools the administration is using and that not all stakes will be permanent.
On Friday, for example, the Department of Defense announced a $29.9 million award under the Defense Production Act to build a demonstration plant in Louisiana to separate and purify gallium and scandium from existing industrial waste, materials needed for defense equipment.
Also this week, the Export-Import Bank of the United States along with DOD doled out a $27 million loan for a Pennsylvania company to refine titanium, nickel and alloy powders.
And yet the prospect of the government moving deeper into private ownership is creating tricky footing for lawmakers, particularly when it comes to critical minerals and raw materials that China currently dominates.
The Trump administration has moved to take equity stakes in at least five mineral companies as it moves to juice domestic mining and overcome what lawmakers say is a clear pattern of market manipulation by Beijing.
“I don’t think there’s enough oversight,” Rep. Raja Krishnamoorthi of Illinois, the top Democrat on the House Select China Committee, told POLITICO’s E&E News when asked about the federal ownership stakes in mineral companies. “I’m not 100 percent bought in.”
“But at the same time, I don’t think there’s … enough attention in general with regard to this issue of critical minerals, and just the fact that the CCP has us over a barrel at this point,” Krishnamoorthi added.
Krishnamoorthi said China has a clear pattern of tanking prices in other sectors like steel, aluminum, paper and glass, solar panels, electric vehicles, and critical minerals. Krishnamoorthi’s staff is working on language to tackle predatory pricing.
“They export the excess at prices designed to undercut their competition … below the cost of production, and then they basically monopolize the market and weaponize that monopoly against us,” he said. “We know exactly what they’re doing.”
Executives from mineral-producing companies offered support and praise for the administration’s moves this week during a hearing before the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party.
Matthew Sloustcher, executive vice president of corporate affairs at MP Materials, said the government’s investment in his company has already generated about $700 million in gains for taxpayers and reduced the threat of predatory pricing. The administration earlier this year took an equity stake in MP Materials, which owns the nation’s only operating rare earths mine in the California desert.
“Free market capitalism is the engine of our economy, … but I think the reality is today we’re not operating in a free market,” said Sloustcher. “Where there is market intervention, it should not just be to absorb risk or take losses, but to enable the U.S. government and the taxpayer to participate in some of the upside.”
Jonathan Evans, CEO of Lithium Americas, echoed that sentiment and said the government’s decision to take an equity stake in his company allowed it to access cheap capital and business partners like General Motors and Apple.
DOE earlier this year took a 5 percent equity stake in the company, which is developing a massive Thacker Pass lithium mine and processing plant in Nevada with a multibillion-dollar federal loan.
“When we do well, the taxpayers do well,” said Evans.
Shares of MP Materials climbed Wednesday after the company announced a partnership with the Trump administration to establish a joint venture to build a rare-earth refinery in Saudi Arabia.
The partnership, which also involves the Saudi state-backed mining company Maaden, plans to supply the manufacturing and defense sectors in both the U.S. and Saudi Arabia.
Still, Republican Rep. Dusty Johnson of South Dakota at the hearing this week said that while he understands the magnitude of U.S. reliance on China, he’s concerned the practice of taking equity stakes in private companies could bleed into other industries.
“I’m open to the idea that this is a bold approach that is unique to your industry,” Johnson said. “I just hope it’s not an example across other industries, because it does seem that if … we start doing this in other industries, we’re going to go to a place that doesn’t feel like free market capitalism.”
