WASHINGTON (Stock Picker’s Corner) — America is waging a “New Arms Race” in critical minerals that pits this country against China. It must accelerate recent creative moves in financing, policymaking and procurement to avoid a disaster that could hammer the country’s economy and military. And it’s a race with a scary finish line: Beijing could weaponize export controls and turn off the rare earth metals spigot as soon as 2027 — meaning America must make its move now.

In short, 2026 could be the year America wins or loses its high-tech future …

Those were some key takeaways from the recent “Critical Minerals & National Security Hill Summit” I attended, held in the Congressional Auditorium in Washington. It was sponsored by the American Legion and National Security Institute and Spire Events. The invited experts included congressmen, senators, corporate CEOs, mining executives and policy influencers from the United States, Norway, Australia and Canada.

“Critical-mineral companies, innovative U.S. companies are at a bit of a crossroads,” said David Kovatch, a partner in Mission Strategies, a strategy and policy consultant, told attendees. “There’s a lot of challenges in this space. Chinese companies are dumping critical minerals in the United States and the global markets. It’s very difficult for signing long-term offtake and obtaining investment. At the same time, there are also some incredible tailwinds,” with the potential for Washington stakes, new types of funding and a (long overdue) realization that America needs to fix its critical minerals strategy.

Kovatch is 100% correct, of course.

The “Long-Term Commodities Supply Shortfall” is one of the key storylines we’re following here at SPC (Indeed, I covered it in great detail in our new book, “Wealth Builder/Wealth Killer,” available on the Amazon Kindle platform). And critical minerals are a crucial component of the commodities storyline since they are key “ingredients” in such realms as artificial intelligence (AI), advanced electronics, defense and the New Cold War, energy and healthcare.

Being competitive in advanced technologies without critical minerals is like trying to bake a cake without flour, butter or a leavening agent: It’ll turn out badly — or you’ll fail.

Given that belief, when I was invited to the summit in Washington, I knew it carried “must-attend” status. I actually went with The Coal Trader’s Matt Warder and finpub maestro John Newtson.

A Critical Mineral Primer

So what, exactly, are we talking about here?

Well, critical minerals are natural resources that are essential to the economy and central to national security — and whose importance only deepens with advances in AI, drones, hypersonic weapons and quantum computing. The “critical” label stems from their “essential” nature, their limited domestic supply and the high risk of supply disruptions.

The “sacred list” of those minerals varies from one nation to the next. But here in the United States, it’s a list of 50 that includes titanium, magnesium, graphite, tungsten and nickel.

Rare earth elements (REEs) are a subset of that — 17 metals like neodymium, dysprosium and terbium whose “rare” moniker stems from their concentration, not actual rarity. They’re crucial to green energy inventions like EVs or wind turbines, smartphones and computers, fighter jets and missiles and even medical gear. While there are deposits all over the world — even here in America — the real “choke point” is processing, since China does about 90% of the world’s rare-earth refining.

America put itself in a tough spot, said U.S. Rep. Rob Wittman (R-Va.), vice chair of the house Natural Resources and Armed Services Committees on armed services.

“What we have found is that other countries — i.e., China, have worked through the decades to essentially corner the market on extraction, on refining and on smelting — not with the idea of economic dominance, but with the idea of strategic dominance,” he told the audience.

Withholding tech, withholding the rare earths themselves — and even withholding the finished magnets — are all parts of China’s playbook. So, too, is predatory pricing — selling at less than it costs to extract and refine, a strategy known as “dumping.”

The endgame looks like this.

China controls the supply (or sets the price) of a mineral, creating a shortage — resulting in desperation-level prices. That shortage draws in domestic companies that see a chance to compete — to make real money (and serve a national need) at this high price level. The company — and sometimes even new outside investors — invests months or years of time and millions in capital to boost extraction or to create new smelting and refining capacity. Once that’s done, China engineers a de facto price cut by twisting open the supply spigot, ending artificial trade restrictions or just charging amounts that are below production costs — driving the new entrants out of business.

China can do this because Beijing subsidizes producers. Companies operating in free-market economies answer to shareholders and must compete on price.

I’ve seen this before …

Fighting the Dragon

During my career as a business reporter and as a financial columnist and stock-picker, I’ve seen and written about this — a lot.

While at Gannett Newspapers, I covered the 1990s dumping case that Eastman Kodak Co. $KODK ( ▼ 4.83% ) waged against rival Fuji Photo Film Co. Ltd in the World Trade Organization (WTO).

While that case (which Kodak lost) involved Japan — America’s nemesis at the time — the precepts are the same. Now China’s the economic enemy.

In critical minerals — while at my previous newsletter Private Briefing in the 2010s — I chronicled the rise and fall of rare earths miner Molycorp, a cautionary tale Rep. Wittman specifically mentioned in his remarks.

Molycorp owned California’s Mountain Pass mine, a major REE operation that tried to capitalize on the Rare Earth Crisis of 2009-2011.

China slapped quotas on rare earth exports in 2009, igniting supply fears and sending the prices of some REEs up 2,400%. Molycorp went public at $14 a share in 2010, raising $400 million. A year later, the stock was at $75, the company was worth $5 billion and investors and Washington saw Molycorp as the battering ram that would end China’s rare earth dominance.

Molycorp snapped up other companies — it even spent $1.2 billion to buy Neo Materials to move into processing and magnets. It financed a lot of these moves with debt.

Other companies — chasing those same soaring prices — moved in, too, crowding the market.

After 2011, China throttled back on those quotas. Prices collapsed by as much as 90%. Molycorp, choking on nearly $1.8 billion in debt, filed for bankruptcy. Neo was spun into a separate venture. And Mountain Pass was placed in “care-and-maintenance” mode.

Fast forward several years. Mountain Pass was reborn as MP Materials Corp. $MP ( ▼ 2.99% ) . And MP Materials is a working model of how America needs to be, Wittman told attendees.

Washington (mostly through the Pentagon) spent $400 million for a 15% preferred stock stake. It loaned MP $150 million to boost processing of heavy rare earth minerals. And it inked a 10-year procurement deal that should help put a price floor under MP’s rare earth oxides.

It’s a mutually beneficial partnership that positions these companies as the “trusted source” for the country’s critical mineral needs — and to stay solvent when competing against China’s unfair trade practices, Wittman said. “We need to complete the supply chain here in the United States.”

That fragmented supply chain is a massive problem, says Mark Montgomery, a retired U.S. Navy admiral and a senior director of the Foundation for Defense of Democracies’ Center on Cyber Technology Innovation (CCTI).

“We suck at this … we suck at supply chains,” retired Adm. Montgomery told the audience.

That’s especially true with Pentagon procurement, which prioritizes costs over supply chain sustainability. After 35 years of military service, Montgomery has a penchant for delivering highly explosive comments.

“We’re basically a cost-driven Department of Defense [a mindset of] ‘if you can give me something cheaper, I’ll take it’,” Montgomery said. “People go out of their way [to dump on] U.S. companies that buy Chinese drones because they’re 35% cheaper or Chinese LIDAR because it’s 35% cheaper … in fact, I made the argument that patriotism is for sale for about 35% [off] … the problem is that our own Department of Defense practices those same mathematics.”

He was recently part of a review of 180 key U.S. weapons systems — every one of them reliant on key components from China.

In fact, Adm. Montgomery ripped the Department of Defense for not zeroing in on this sooner, saying he was “surprisingly and disappointingly shocked by our reliance on China in these areas” — which wasn’t really a worry until six months ago.

America’s defense supply chain is “compromised,” he conceded. And that will really hit home when China (inevitably) makes a cross-strait move on Taiwan, which America has pledged to defend.

Montgomery says 2030 is probably the year to circle on your calendar for such a move. And if that’s the date, the United States could see a full-stop China embargo in 2027. China was emboldened by the fact that U.S. President Donald Trump “buckled pretty quickly” in talks with China President Xi Jinping, meaning Beijing will keep wielding export controls like a sword.

Others lauded the constructive pivot the Trump Administration and Congress have engineered.

That means 2026 must be a year of action.

And that can start today, said U.S. Sen. Todd Young (R-IN), a key player in the CHIP and Science Act, an “industrial policy” that’s a model for what America needs to do with critical minerals.

Where We Go Next

Reapportioning resources is a good start, said U.S. Sen. John Hickenlooper (D-Colo).

At this point, about three quarters of U.S. research and development goes into life sciences and 9% goes into energy, he said. But only a “tiny fraction” goes into critical minerals.

It needs to be more.

And marshaling resources — and having a plan to do so — is crucial. Key initiatives summit panelists talked about include:

⭕Better Data: It sounds so basic, but it’s the place to start. Know what we have and understand what we need. Some of the data probably exists — within the U.S. Geological Survey (USGS), for instance. And get a better handle on those same metrics for China — even if it means getting U.S. intelligence assets involved.

⭕Enabling Legislation: Federal and state policies — even a national “industrial policy” akin to the CHIPS Act — that harnesses that roster of resources. The goal: create a de facto “marketplace” that operates in a “fair-and-equitable” manner.

⭕Regulatory Reform: Streamline the permitting process for new mines and fast-track new processing operations.

⭕Reindustrialization: New mines and new smelting operations are part of the “Deglobalization” storyline that we’ve been talking about since we launched SPC two years ago. This “Reindustrialization of America” will also demand the training of a new generation of workers — miners, engineers, metallurgists, production specialists and machinists.

⭕Innovative Financing: We have to pay for this. Equity stakes by government, nurturing tax breaks, specialized credit lines, deals with sovereign wealth funds (SWFs). The Trump Administration has a new penchant for equity stakes, having already done this with MP, Trilogy Metals $TMQ ( ▲ 0.22% ), Intel Corp. $INTC ( ▲ 0.69% ) and Lithium Americas.

⭕Stockpiling: But real stockpiling. Not just the memorandums of understanding that don’t lead to physical inventory boosts.

⭕Domestic Partnerships: Part of any “industrial policy,” these partnerships will stretch across government, industry peers, financiers, academia, intelligence agencies, research labs, enabling companies and think tanks — all marching toward quantifiable goals and deadlines.

⭕International Partnerships: Link-ups with similar ventures overseas are a start. But the key here is to connect with countries interested in creating an “outside China” marketplace. Canada and Australia are obvious candidates. A South Asia strategy — especially in the Mekong River area — could give the United States a super partner. And America’s innovation and environmental focus could bring cleaner wealth to a region that’s been afflicted by damaging and illegal mining. Too, America should consider an Africa strategy, where we could capitalize on growing discontent with Beijing.

⭕Even Seabed Mining: An untapped region that could yield new deposits of REEs and other critical minerals. The technology is available. And countries are already staking claims.

But time is short: The next 12 months could determine whether we win or lose here. Success means America will continue as an innovator — and will capitalize in opportunities like quantum computing.

We need to “create a marketplace where we can operate in a fair-and-equitable manner outside of China’s unfair trade practices,” Wittman, the Virginia congressman, said.

His final comment said it all: “This is one of those all-hands-on-deck calls. It’s one of those calls for a nation to action to get things done in a speed of relevance. I want to make sure we’re getting things done — not in years, but in months — because that’s the time frame we have [in which] to operate under in order to be successful.”

It was quite a summit. It was worth the trip. We go the extra mile for you folks. I’ll be back with some specific ways for Wealth Builders like us to profit.

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