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The US critical minerals sector is at a policy inflection point. Washington is simultaneously tightening domestic control over battery scrap and stepping back from its own stockpiling ambitions. For investors, the opportunity lies in that disconnect.
The Bureau of Industry and Security banned exports of "black mass" and scrap tungsten for one year, effective later this month. Black mass is the powder left over when lithium-ion batteries are shredded.
US sellers must now direct those materials to domestic buyers only, unless a specific exemption is granted. The rule stems from a Trump order citing an "inadequate supply" of certain metals as a national security risk.
The EU is moving in the same direction, with its own ban on black mass exports to non-OECD countries set for November.
The policy has teeth on the tungsten side. China is the world's largest tungsten producer and has already restricted its own exports of the metal, which is used in tank armor, munitions, and engine components.
US tungsten scrap had been flowing to recycling hubs in the Philippines, Taiwan, Vietnam, and South Korea before this ban.
For black mass, the picture is more complicated. The US has limited domestic processing capacity for the material. Much of it has historically been shipped to Asia for recycling into usable metals. Banning exports without building out that capacity creates a domestic bottleneck.
The same week the export ban landed, the Defense Logistics Agency canceled a tender to purchase roughly 16K tons of battery-grade lithium carbonate worth up to $300M. No reason was given. The DLA had extended the original July deadline twice before dropping it entirely.
This is not the first stumble. The DLA canceled a cobalt purchase tender last year under similar circumstances. The pattern points to real procurement friction inside the government's own critical minerals strategy.
Lithium carbonate prices have surged ~20% so far this year in China, though they remain volatile. That price environment likely complicated efforts to lock in the fixed five-year pricing the tender required.
Albemarle, one of the world's largest lithium producers, is navigating the same volatile market from the producer side.
The company cut headcount and reorganized its supply chain to hit a $400M annualized cost and productivity target. Total sales fell 7% in the second quarter.
Adjusted earnings came in at $0.11 per share against an analyst consensus of a $0.84 loss. The company expects to be free-cash-flow positive this year if current lithium prices hold.
Finance Chief Neal Sheorey noted that demand has held up better than expected, pointing to continued EV adoption in China and Europe.
The longer-term supply picture for lithium is where the tension sharpens. The IEA recorded critical minerals investment down 9% in 2025, the first substantial decline since 2020.
Battery materials companies cut spending by 20%. Lithium specialists cut roughly 40%. That happened while lithium demand grew ~25% annually over the previous two years.
"These sort of projected supply models are falling away because they can't afford to actually come online. We're actually seeing contraction in the production space."
Blake Hylands, Lithium Ionic
Near-term prices remain capped by restart supply, including CATL's Jianxiawo operation, while global production is targeted to grow 26% year over year in 2026.
But the investment cuts mean future supply pipelines are thinner than the headline growth numbers suggest. All signals point the same direction: domestic supply is being ringfenced before the infrastructure to process it is ready.