A bipartisan proposal in Congress aims to establish a new federal agency with a $2.5 billion budget to boost domestic production of rare earths and other critical minerals. The move comes as the U.S. seeks to reduce its reliance on China, which currently processes over 90% of the world's critical minerals.

The proposed agency would be tasked with spurring domestic mining and processing of these materials, which are essential for a wide range of high-tech products, including cellphones, electric vehicles, jet fighters, and missiles. The $2.5 billion investment would likely be allocated to grants, loans, and other incentives for companies involved in the critical minerals supply chain.

The initiative arrives amid growing concerns about China's dominance in the critical minerals market. During the trade war with Washington, Beijing leveraged its control over these resources, highlighting the vulnerability of the U.S. supply chain. In response, the Pentagon has already spent nearly $5 billion in the past year to secure access to these materials.

The Trump administration also took steps to address the issue, but the proposed agency represents a more comprehensive approach. It remains to be seen how the new agency, if approved, would align with existing White House policies. In October, Presidents Trump and Xi Jinping agreed to a one-year truce, with China continuing to export critical minerals while the U.S. eased export controls on U.S. technology to China.

The creation of a new agency could have significant implications for the mining and manufacturing industries. Increased domestic production of critical minerals could create jobs and reduce the risk of supply disruptions. However, it could also face challenges related to environmental regulations, permitting processes, and competition from established players in China and other countries. The future success of the initiative will depend on its ability to navigate these challenges and create a sustainable and competitive domestic critical minerals industry.