Trump administration bypasses contracting laws in $3.5 billion rare earth minerals deal

The Pentagon invoked a rarely used Cold War-era law to secure a $3.5 billion stake in MP Materials, the nation’s only rare earths miner, while sidestepping federal contracting and procurement rules.

Hannah Northey reports for E&E News.

In short:

• The Department of Defense used the Defense Production Act’s “without regard to” clause to avoid standard safeguards like the Competition in Contracting Act and Cost Accounting Standards.
• Critics warn the move reduces transparency, weakens taxpayer protections, and risks picking winners in the industry, though supporters argue it is necessary to counter China’s dominance.
• The deal gives the government a 15% stake in MP Materials, a $150 million loan for expansion, and long-term purchase commitments for rare earth magnets.

Key quote:

“Using the ‘without regard’ clause by itself is not unlawful. Instead, it operates in a lawless space, constrained only by the availability of funds and a national security need, however a president defines it. For the sake of separation of powers, that’s truly frightening.”

— Matthew Zolnowski, president of supply chain consulting firm Greyfriars LLC

Why this matters:

Rare earth elements sit at the heart of modern technology, powering everything from smartphones and fighter jets to wind turbines and electric vehicles. Yet the U.S. relies heavily on China, which controls more than 90% of the global supply chain and has shown a willingness to weaponize its dominance. Efforts to rebuild a domestic supply raise difficult questions about transparency, environmental risks, and the balance of power between national security and public accountability. Mining and refining rare earths are messy, energy-intensive processes that leave behind toxic waste, meaning the rush to onshore production could bring not only economic and strategic benefits but also new strains on land, water, and surrounding communities.

Learn more: The hidden cost of powering your phone might be someone else’s cancer