The US and China ramp up funding for domestic critical mineral exploration

China and the US are both increasing funding for domestic critical mineral exploration to bolster supply self-sufficiency, as competition over strategic supply chains for advanced technologies — such as electric vehicles (EVs) and artificial intelligence (AI) — intensifies between the two superpowers.

Since entering office in January, the Trump administration has prioritised domestic mining as a matter of national security. An executive order signed last week invoked the Defense Production Act to re-direct Biden-era federal funding (approximately $700 million in 2024) towards domestic critical mineral production, establishing a new critical mineral fund for domestic projects and identifying mineral-rich federal lands, offering leases on suitable sites to private companies for mineral extraction.

Meanwhile, in China, at least half of the 34 provincial-level governments have increased subsidies or expanded access to critical mineral exploration over the past year, according to the Financial Times. Xinjiang — a key emerging hub for China’s domestic lithium production — increased support for geological exploration to RMB 650 million ($89.6 million) in 2025, three times 2023 levels.

China is leveraging its control over critical mineral supply chains in the escalating tit-for-tat trade war between the two superpowers, imposing export restrictions on a number of strategic minerals last year, including gallium, germanium, antimony, graphite and tungsten last year, in response to a ban on US technology exports to China and the spectre of rising tariffs.

How exposed is the US to China?

Benchmark’s data illustrates that the US has direct supply vulnerabilities to China in graphite, manganese, and rare earths. Alongside directing funding to domestic projects, the Trump administration has targeted access to critical minerals abroad in Greenland and Ukraine to de-risk these supply chains.

But US exposure to China’s dominance over critical mineral supply chains extends beyond its direct reliance on imports. China’s strategic drive for critical mineral supply self-sufficiency — to support its clean energy and advanced technology manufacturing base — has created sizable supply surpluses across several markets, pushing prices down to levels that are intolerable for Western-owned operations.

This trend was evident in the nickel market in 2024. The Australian nickel industry, once a major supplier for the US battery sector, has been significantly affected by a sharp decline in nickel prices since 2023. This drop was driven by the expansion of Chinese-owned nickel operations in Indonesia and caused several Australian mines to halt operations last year. A similar situation has unfolded in the cobalt market.

In addition to mine closures, the current low-price environment is discouraging private investment in new projects across the West. These factors present significant risks to US supply security and could limit the availability of non-Chinese-owned supply globally.