The impact of the “blue wave” spread to the mining sector, and key mineral transactions supported by the Trump administration are facing scrutiny

The Zhitong Finance App learned that mining companies that have received billions of dollars of support from the Trump administration are facing a new risk: after the Democratic Party fully wins the midterm elections, these deals will be subject to stricter scrutiny.

Even before the blue wave swept through Congress, Democratic lawmakers questioned Trump's approach to rebuilding America's critical mining industry. The Trump administration supports mining and processing companies with a range of unconventional financing arrangements to reduce dependence on China, including direct shareholding and issuing warrants. Democratic lawmakers, including Massachusetts Senator Elizabeth Warren, named beneficiaries such as USA Rare Earth (USA Rare Earth), Vulcan Elements, and Kaz Resources earlier this year, questioning that their ties to the Trump family and Secretary of Commerce Howard Lutnick (Howard Lutnick) may cause conflicts of interest.

Such deals have even drawn criticism from within the Republican Party. Former Senator Pat Toomey (Pat Toomey) posted on the X platform on Thursday about the rare earth agreement: “We all seem to be against state-owned grocery stores, but can we accept that the government holds shares in semiconductor companies and rare earth mining companies?”

List of transactions

USA Rare Earth (USA Rare Earth) is seeking to build rare earth mines and processing plants in the US. In January of this year, it reached a $1.6 billion agreement with the Department of Commerce, which includes about 10% of the government's shares. The company also selected Cantor Fitzgerald Investment Bank as the lead placement agent for an independent $1.5 billion private equity offering — the investment bank previously managed by Lutnick and now led by its children.

Private rare earth company Vulcan Elements had just taken a stake in the company a few months before receiving a $620 million conditional loan promise from the Department of Defense and a $50 million equity investment from the Department of Commerce. Both companies did not respond to requests for comment.

Since Trump took office, the administration has also invested in rare earth miners MP Materials, Lithium Americas (Lithium Americas), and Trilogy Metals, and has supported Korea Zinc (Korea Zinc, the world's largest silver producer) in Tennessee.

Kazakh tungsten mining company Kaz Resources has previously received up to $1.6 billion in initial support from the US government, and Trump's two sons are also passive investors — the two have obtained indirect interests in the project through a series of deals involving Dominari Holdings. The company plans to go public through direct listing next year. “Since 2023, we have been working closely with US officials to secure a generational asset that will lock the West in an independent tungsten supply chain,” Kaz Resources said in a statement, welcoming any questions from US officials.

Bipartisan Undertones and New Resistance

Reducing dependence on foreign mineral supplies has always been supported by both parties. The Biden administration has also invested billions of dollars in domestic mining and processing, including the Nevada Thacker Pass project to support the US lithium industry; members of the House of Representatives from both parties have also supported the Trump administration's 2025 deal with MP Materials, seeing it as a way to expand rare earth production outside of China. “These projects are critical to Western industrial resilience and national security,” said Pavlo Verkhniatskyi, managing partner at corporate intelligence firm COSA. “Investigations and political disputes can complicate financing, delay investment decisions, and slow down strategically important projects.”

However, the rapid expansion of the federal government's role in the key mining industry has raised concerns about how to negotiate deals and whether politically linked companies will receive preferential treatment. California Representative Jared Huffman (Jared Huffman) and New Mexico Senator Martin Heinrich (Martin Heinrich) have called for greater transparency in government mining investments, including the selection criteria for beneficiaries, the legal authorization under which the investment is based, and safeguard mechanisms to protect taxpayers. In a February letter to the Trump administration, the three wrote: “Privileging specific businesses through direct ownership — essentially picking winners and losers — the government could hurt broader market competition and the development of innovative technology or mineral alternatives.”

The risk is that the Democratic Party can use its control over various congressional committees to hold hearings, review documents, investigate the government's choices of investment targets, challenge future funding in the funding process, and push the government to disclose more information about its expanding private sector investment portfolio. However, a change in congressional control is unlikely to reverse signed agreements or recover funds already lawfully disbursed. “I don't think the intention is necessarily to tear up existing binding legal contracts,” said John Miller (John Miller), an analyst at TD Cowen. He also pointed out that the Republican Party has used similar methods — for example, in 2023, House Republicans launched a large-scale investigation into the Biden family's financial dealings.

But those companies that still have federal support conditions, or whose agreements have not yet been finalized, face greater uncertainty as lawmakers review government decisions. “My opinion is that these plans will be suspended as some previous deals are scrutinized more closely,” Marex advisor Ed Meir (Ed Meir) said.