The "Blue Wave" impact spreads to the mining sector, Trump administration-backed critical mineral deals face scrutiny

According to Zhitong Finance APP, mining companies that received billions of dollars in support from the Trump administration are now facing a new risk: stricter scrutiny of these deals following a sweeping victory for Democrats in the midterm elections.

Even before the blue wave swept Congress, Democratic lawmakers had already questioned the methods used by Trump to rebuild America’s critical minerals industry. The Trump administration backed mining and processing companies with a series of unconventional financing arrangements aimed at reducing reliance on China, including direct equity stakes and the issuance of warrants. Earlier this year, Democratic lawmakers including Massachusetts Senator Elizabeth Warren called out beneficiaries such as USA Rare Earth, Vulcan Elements, and Kaz Resources, raising concerns over potential conflicts of interest due to their connections with the Trump family and Commerce Secretary Howard Lutnick.

Such deals have even drawn criticism from within the Republican party. Former Senator Pat Toomey posted about the rare earth agreement on X on Thursday: “We all seem to oppose state-owned grocery stores, but are we OK with the government owning stakes in semiconductor firms and rare earth mining companies?”

List of Deals

USA Rare Earth is seeking to build rare earth mines and processing plants in the US, and reached a $1.6 billion agreement with the Department of Commerce in January, which includes about a 10% government stake. The company has also selected Cantor Fitzgerald to lead a separate $1.5 billion private equity placement—the investment bank was previously led by Lutnick and is now run by his sons.

Private rare earth company Vulcan Elements secured a $620 million conditional loan commitment from the Department of Defense and a $50 million equity investment from the Department of Commerce just months after 1789 Capital (with Donald Trump Jr. as a partner) became a shareholder. Neither company has responded to requests for comment.

Since Trump took office, the government has also taken stakes in rare earth miner MP Materials, Lithium Americas, and Trilogy Metals, and backed Korea Zinc (the world’s largest silver producer) in its Tennessee project.

Kaz Resources, a Kazakh tungsten mining company, previously secured up to $1.6 billion in preliminary support from the US government. Trump's two sons are also passive investors in the company—they acquired indirect interests in the project through a series of transactions involving Dominari Holdings. The company plans to go public directly next year. “Since 2023, we have worked closely with US officials to secure a generational asset that will lock in an independent tungsten supply chain for the West,” Kaz Resources said in a statement, welcoming any questions from US officials.

Bipartisan Foundations and New Obstacles

Reducing dependence on foreign mineral supplies has traditionally enjoyed bipartisan support. The Biden administration has similarly invested billions in domestic mining and processing, including backing Lithium Americas’ Thacker Pass project in Nevada; both Republican and Democratic lawmakers also supported the Trump administration’s 2025 deal with MP Materials, viewing it as a way to expand rare earth production outside China. “These projects are crucial for Western industrial resilience and national security,” said Pavlo Verkhniatskyi, a managing partner at intelligence company COSA. “Investigations and political controversy could complicate financing, delay investment decisions, and slow projects of strategic significance.”

Yet the rapid expansion of the federal government’s role in the critical minerals industry has raised concerns about how deals are negotiated and whether politically connected companies are receiving special treatment. Representative Jared Huffman of California and Senator Martin Heinrich of New Mexico have called for increased transparency in government investments in mining, including the criteria for selecting supported companies, the legal authorizations for investments, and protections for taxpayers. In a February letter to the Trump administration, the three lawmakers wrote: “By granting privileged status to specific companies through direct ownership—essentially picking winners and losers—the government may harm broader market competition and the development of innovative technologies or mineral substitutes.”

The risk is that Democrats, controlling key congressional committees, could hold hearings, subpoena documents, and investigate how the government picks investment recipients. They could also challenge future funding in appropriations processes and push for broader disclosure of the government’s expanding private sector investment portfolio. However, a change in congressional control is unlikely to overturn already signed agreements or claw back legally appropriated funds. “I don’t think the intent is necessarily to tear up existing binding contracts of law,” said TD Cowen analyst John Miller. He also noted that Republicans have used similar tactics—for example, House Republicans launched extensive investigations into the Biden family’s finances in 2023.

However, companies still subject to federal conditions or with deals not yet finalized face greater uncertainty as lawmakers scrutinize administration decisions. “My view is that as some of these deals get looked at more closely, those programs will see a pause,” said Ed Meir, an advisor at Marex.