CHIPS Act Funds May Be Redirected to Boost Domestic Minerals

The Trump administration is considering redirecting at least US$2 billion from the CHIPS Act to support critical minerals projects and increase US Commerce Secretary Howard Lutnick’s control over the sector, reported Reuters.

The plan would reallocate funds already approved by Congress for semiconductor research and factory construction, avoiding a new spending request. The goal is to reduce US dependence on China for minerals essential to electronics and defense industries. Expanding Lutnick’s role would centralize funding decisions, a step encouraged by White House officials after the Pentagon’s recent investment in MP Materials raised questions about Washington’s rare earths strategy.

US Commerce Department manages the US$52.7 billion CHIPS and Science Act, signed by President Biden in 2022 to boost domestic chip production and reduce reliance on Asia. Since taking office in January, Trump has criticized the law as a corporate giveaway and has sought to renegotiate grants to chipmakers.

Redirecting funds to mining projects aligns with the semiconductor industry’s need for germanium, gallium, and other critical minerals, many of which are tightly controlled by China. “The administration is creatively trying to find ways to fund the critical minerals sector,” said an anonymous source.

The move could benefit mining, processing, and recycling companies. Most critical minerals are not processed domestically. Kent Masters, CEO, Albemarle, the world’s largest lithium producer, recently noted that US lithium refinery plans are difficult without government support.

It is unclear whether funds would be used as grants or equity stakes, but Lutnick aims to release the US$2 billion quickly, with additional reallocations expected. The Biden administration had considered using CHIPS Act funds for rare earths but found it uneconomical, leaving such projects to the Department of Energy.

The Trump administration is also exploring CHIPS funding to take equity stakes in Intel and other chipmakers in exchange for cash grants. Since January, Trump has signed executive orders to boost domestic and deep-sea mining and recently met with Rio Tinto and BHP CEOs, emphasizing US support for mining.