Pentagon's AI Metals Program Goes Private to Boost Western Critical Mineral Supply

Pentagon's AI Program Transitions to Private Sector

The U.S. Department of Defense's Open Price Exploration for National Security AI metals program, launched in late 2023, has been transferred to a non-profit organization called the Critical Minerals Forum (CMF). This artificial intelligence program, designed to predict the supply and price of critical minerals, aims to counter China's dominance in the sector 1

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Critical Minerals Forum: A New Player in the Market

The CMF, led by former U.S. diplomat Rob Strayer, has attracted over 30 mining companies, manufacturers, and investors as its first users. Notable members include:

• Volkswagen (auto manufacturer)
• South32 (copper miner)
• MP Materials (rare earths producer)
• RTX (defense contractor)

The organization held its first meeting with members in November, marking a significant step in privatizing the AI program 1

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AI Model: Transforming Metal Supply Deals

The AI model developed by the CMF aims to revolutionize how certain metals are bought and sold. Its primary goals include:

1. Calculating metal costs by factoring in labor, processing, and other expenses
2. Eliminating Chinese market manipulation from price calculations
3. Providing confidence to buyers and sellers in deal economics

For example, the model could forecast available nickel supplies in 2028 if the U.S. were to impose a 100% tariff on Indonesian imports. This data could help manufacturers make informed decisions about investing in U.S. nickel mines or securing future production 1

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Addressing China's Market Influence

The CMF's initiative comes at a crucial time as Beijing restricts critical minerals exports. The program aims to:

1. Counter Chinese overproduction in countries like Indonesia and Congo
2. Address market interference in niche battery minerals like rare earths, germanium, and gallium
3. Encourage the development of more U.S. mines and processing facilities 1

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Early Developments and Potential Impact

Some deals involving the CMF are already taking shape:

• Nevada officials plan to work with the CMF and its AI model to attract copper smelting to the state, addressing the U.S.'s limited copper smelting capacity 1

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The program could also benefit startups like Massachusetts-based Phoenix Tailings, which hopes to use CMF data to create U.S. prices for minerals tied to actual production costs 1

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Challenges and Skepticism

Despite its potential, the program faces skepticism:

• Questions about its ability to transform long-established metal trading practices
• Concerns about the complexity of the global metals market compared to other sectors like oil

Ian Lange, a mining economics professor at the Colorado School of Mines, expressed doubts about the program's effectiveness 1

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Government Support and Future Prospects

U.S. President Donald Trump has ordered his administration to work with private developers to boost U.S. crucial minerals production. The CMF's data could aid this effort, potentially influencing future policy decisions on mineral imports and tariffs 1

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As the CMF continues to develop its AI model and expand its network, its impact on the critical minerals sector and global supply chains remains to be seen.