US government agency DFC mines critical minerals industry by joining ADQ-backed platform

Investment outlay expanded to $1.8bn amid Chinese export controls on rare earth minerals

A sample of bastnaesite ore, a mineral used in the rare earth industry, is displayed at the Geological Museum of China in Beijing. Reuters

The US International Development Finance Corporation (DFC) has joined a critical minerals consortium backed by the UAE’s ADQ and Orion Resource Partners, expanding the size of the fund to $1.8 billion.

The DFC’s initial capital commitment was matched by both funds managed by Orion and ADQ, the New York-based alternative asset manager said in a statement on Thursday.

In January, Orion and ADQ, Abu Dhabi's sovereign wealth fund with $225 billion in assets under management, announced the launch of a 50-50 joint venture with initial capital of $1.2 billion for the first four years. The fund’s mandate is to make strategic investments in the metals and mining sector to guarantee supply chain security.

ADQ and Orion did not respond to requests for comment on whether the $600 million additional funding was entirely from DFC.

Frank Fannon, a former US assistant secretary of state for energy resources, who is a co-founder and managing director at Orion, said the US “understood that it must develop alternative critical minerals supply chains for more than a decade”.

“However, America has lacked a private sector champion that understands niche metals and commodities,” he added.

The addition of DFC as a partner comes at a time when the US has been expanding collaboration on critical minerals to challenge Chinese dominance in the supply chain for rare earth metals.

In October, the Pentagon said it would procure up to $1 billion worth of critical minerals as part of a global buying spree in the face of Chinese restrictions on the export of such commodities.

Critical minerals are key to decarbonising the global economy and can be used in renewable energy technology – electric vehicles, solar panels and wind turbines – as well as in everyday electronics, advanced computing and the aerospace sector.

The consortium plans to secure up to $5 billion in funding, Orion said on Thursday, without mentioning a timetable for the targeted funding.

With its expanded mandate, the consortium plans “to invest in and develop critical minerals in emerging and other market jurisdictions”, the company said.

The partners will also “manage offtake, develop domestic processing and integrate and scale cost-effective minerals technological solutions”.

In January, Orion and ADQ said they would use their investment platform to secure long-term agreements to source essential minerals including copper, high-grade iron ore and other critical commodities required in energy transition.

The US government’s interest in the platform comes after a series of export controls on rare earth metals and minerals was unveiled by Beijing this month. The move soured already strained relations between the governments in Washington and Beijing, prompting US President Donald Trump to say he would no longer meet Chinese President Xi Jinping in South Korea on the fringes of the Asia-Pacific Economic Co-operation in November.

Securing critical minerals supply chains has become increasingly important amid escalatory tariffs imposed by the US and China, who are dominant players in the trade of these commodities.