The Pentagon said on Sept. 14 that it will invest $450 million in Elmet Group through redeemable preferred stock with warrants, giving the U.S. government a stake of up to 19.9% in the mining and materials company and the right to appoint one independent director to Elmet’s board. The deal is being described as part of the Trump administration’s broader push to de-risk strategic metal supply chains from China. After the announcement, Elmet (ELMT) shares surged more than 55% in one day.
China’s export controls have driven tungsten prices sharply higher
The report traces the backdrop to early 2025, when China imposed export controls on tungsten. The metal is widely used in armor-piercing munitions, rocket engine nozzles, leading-edge structures for hypersonic vehicles and tungsten-carbide cutting tools, making it strategically important for both military and industrial use.
Since those controls took effect, tungsten prices have climbed more than sevenfold, according to the report. Prices rose faster earlier this year as military demand increased during conflict in the Middle East.
China currently controls about 85% of global tungsten supply and 40% of global molybdenum supply, the report said, leaving the U.S. defense industrial base exposed to long-running supply vulnerabilities. A revised U.S. defense procurement rule is scheduled to take effect on Jan. 1, 2027. It will fully restrict tungsten sourcing from certain countries and shift domestic procurement from a preference to a mandatory requirement.
Funding will go to plants, a Nevada APT project and overseas operations
According to the Pentagon statement, the investment structure combines redeemable preferred shares with warrants. Elmet said the $450 million will be used in three main areas.
- It will upgrade existing manufacturing and processing facilities in Maine, Michigan and Ohio that produce tungsten, molybdenum and precision-engineered components.
- It will fund the Springer Tungsten Complex joint venture in Nevada. Once completed, the site is expected to become North America’s only independent producer of ammonium paratungstate, or APT.
- The remaining capital will be used to expand Elmet’s mining and processing operations in the U.S., Australia and Spain to strengthen long-term access to upstream raw materials.
Defense Logistics Agency also awarded a contract worth up to $2 billion
Beyond the equity investment, the Defense Logistics Agency awarded Elmet an indefinite-delivery, indefinite-quantity contract with a ceiling value of $2 billion and a guaranteed minimum of $150 million. The contract is intended to replenish the U.S. national defense strategic mineral stockpile.
The report said that adds another layer of strategic weight to the transaction.
Tungsten sits inside more than 100 U.S. defense programs
On the military side, tungsten is part of the supply chain for more than 100 U.S. defense programs, including the F-35 fighter jet, the Patriot air defense missile system, the Terminal High Altitude Area Defense system and nuclear-powered submarines.
Defense Department official Kollitides II said, "Tungsten is critical to systems that protect U.S. warfighters and preserve deterrence, and the United States cannot allow that exposure to remain at risk."
The statement added that the investment is expected to create more than 1,200 jobs in U.S. manufacturing and mining.
Washington has also moved in rare earths and lithium
The Elmet transaction marks the latest step in the Trump administration’s mineral security strategy. The Pentagon had already completed a $400 million investment in rare earth company MP Materials and also taken positions in USA Rare Earth, Canada-based Lithium Americas and mine developer Trilogy Metals.
As presented in the report, the U.S. government is moving on two tracks at once: building domestic capacity and diversifying overseas sources. The aim is to have an alternative supply system in place before the 2027 procurement rules come into force.