US in talks to fund multibillion-dollar mining initiative for critical minerals

The US government is in talks to set up a multibillion-dollar fund for overseas mining projects with investment firm Orion Resource Partners, as Washington seeks to counter Chinese dominance of critical minerals.

The US International Development Finance Corporation and New York-based Orion would each invest $600mn or more in the new fund — potentially alongside other sovereign investors and US agencies, said people familiar with the talks.

The fund would invest in projects to extract critical minerals such as copper and rare earths, which are crucial for defence and high-tech manufacturing.

“These talks really show that the [Donald] Trump administration is trying to align its financial tools with its broader mineral ambitions,” said Gracelin Baskaran, director of the critical minerals security programme at the Center for Strategic and International Studies in Washington. “This public-private partnership stands to catalyse a significant amount of capital.”

Talks between Orion and DFC, which started last year, were held up by questions from commerce secretary Howard Lutnick, who sits on its board, although those have largely been addressed.

The US has discussed investing $600mn, of which $100mn would be for equity stakes in mining projects and $500mn for debt. The DFC, which is only authorised to invest outside the US, is constrained in how much equity it can take in projects because of the rules governing its mandate.

The DFC declined to comment on the deal but said the agency “actively pursues investments that are aligned with administration priorities, including diversifying critical mineral supply chains”. But one person familiar with the situation said the deal was going ahead.

The White House has made securing critical minerals supplies a priority and has rapidly expanded government investments into mining and supply chains.

The DFC is expected to work more closely with the private sector under the leadership of Ben Black, who is awaiting Senate confirmation.

It has made a range of mining investments, including providing $105mn for mining start-up TechMet and investing $50mn in a rare earths project in South Africa. The deal with Orion, if finalised, would be its largest. 

The DFC has also committed to lend about $550mn to the Lobito Atlantic Railway, a joint venture between Trafigura and Mota-Engil.

Earlier this year Orion set up a $1.2bn joint venture with ADQ, the Abu Dhabi sovereign wealth fund, into which each side contributed $600mn — a potential model for how the US fund could operate, said people familiar with Orion’s thinking.

Orion declined to comment.

Led by chief executive Oskar Lewnowski, Orion is a specialist investor in mining and commodities with $8bn under management. It has a private capital arm, through which it provides equity and debt funding to mining projects, and a hedge fund arm specialising in commodities.