Many U.S. companies, especially those in advanced technologies like semiconductors and energy storage, rely on critical minerals and rare earth elements supply chains for their manufacturing efforts. There are, however, significant risks to U.S. manufacturing because the People’s Republic of China (PRC) controls the supply chains for many of these resources. Additionally, mining and processing projects for critical minerals outside of China struggle to access sufficient capital, further constraining supply for U.S. users.
Author: EXIM Supply Chain Resiliency Initiative Team. Source: International Energy Agency Critical Minerals Outlook 2023 & 2024. URL: https://www.iea.org/reports/global-critical-minerals-outlook-2024
As a means to maintain U.S. jobs while enhancing supply chain resiliency in the critical minerals sector, EXIM recently created the Supply Chain Resiliency Initiative (SCRI) to finance overseas mines outside of supply chains currently dominated by the PRC. Under the SCRI, EXIM can finance international projects with signed long-term “off-take” contracts with U.S. companies, providing these U.S. companies with access to critical minerals from partner countries. Typically, EXIM’s financing is tied to U.S. exports of goods and services to international projects. Here, EXIM’s financing is tied to EXIM’s import authority and the financed amount depends on the amount of the off-take contract between the international project and the U.S. importer.
The project must have signed off-take contracts that will result in the critical minerals and rare earth elements output being utilized in the United States, for products that are manufactured in the United States. Another requirement is that the project cannot be controlled by the PRC, be physically in the PRC, owned by PRC entities, rely on PRC technology, or if a significant amount of the project’s customers are in the PRC.
The hypothetical scenario below shows how an off-take agreement could look between EXIM, an Australian mining operator, a Japanese or South Korean mineral processing intermediary, and U.S. off-taker companies.
Author: EXIM Supply Chain Resiliency Initiative Team
Under the SCRI, U.S. off-take from the international project is linked to the amount of financing EXIM is able to provide to the project. In other words, EXIM’s financed percent of the project capital expansion directly correlates with the percent of off-take that will be sent to the U.S. If 100 percent of the off-take is being sold to buyers in the U.S. for products made in the U.S., then EXIM can likely provide the entire debt portion of the project’s capital needs.
International mines with future off-take sales to both U.S. companies and international corporations whose U.S. operations buy off-take are eligible. The pricing and structuring of SCRI loans is flexible because the loans are not “tied” to U.S. exports and therefore are not subject to the Organization for Economic Co-operation and Development (OECD) arrangement, which guides all “export tied” finance provided by EXIM and other OECD member export credit agencies.
Other EXIM products and programs integrate with SCRI. EXIM’s Export Credit Insurance could be used if there are U.S. exports being sold to international mining operators, and the Make More in America Initiative (MMIA) could be used to finance U.S. domestic production of critical minerals and rare earths.
For more information about SCRI, including application requirements, please email ctep@exim.gov.
