TLDR
- Critical Metals Corp (CRML) stock jumped 75% in premarket trading after Reuters reported the Trump administration is considering taking an equity stake in the company
- The U.S. government is in talks to convert a $50 million Defense Production Act grant into roughly an 8% ownership stake in the company
- The deal would give Washington direct interest in the Tanbreez project in Greenland, one of the largest rare earth deposits in North America
- Critical Metals acquired the Tanbreez project last year for $5 million cash and $211 million in stock after Biden administration lobbying prevented Chinese firms from purchasing it
- Negotiations have been ongoing for six weeks but are not final, and the deal could still fall through or result in a different stake size
Critical Metals Corp saw its stock price surge 75% in premarket trading on Monday. The jump came after Reuters reported that the Trump administration is negotiating to take an equity stake in the New York-based mining company.
The talks center on converting a $50 million Defense Production Act grant into government ownership. Critical Metals applied for this grant back in June.
If the conversion goes through at that amount, Washington would own roughly 8% of the company. However, sources told Reuters the negotiations are still ongoing and not finalized.
The final stake size could be larger. The deal could also fall apart entirely.
Over the past six weeks, U.S. officials have been working through the details with the company. One key discussion point involves how to structure warrants that would give the government its ownership position.
The equity stake would be separate from another potential government investment. The U.S. Export-Import Bank is considering a $120 million loan to help develop the Tanbreez project.
Access to Greenland’s Rare Earths
The Tanbreez project sits at the heart of this deal. Critical Metals acquired the Greenland property last year for $5 million in cash and $211 million in stock.
The Biden administration had lobbied for an American company to buy the project. This effort successfully blocked Chinese firms from acquiring it.
Tanbreez is believed to hold one of the largest rare earth element deposits in North America. These 17 metals are used in consumer electronics, electric vehicles, aircraft engines, and military applications.
The Trump administration has made reducing reliance on China for rare earth minerals a priority. China currently has near-total control of the rare earths sector.
These materials are critical components in everything from missile defense systems to renewable energy equipment. President Trump invoked emergency powers earlier this year to boost domestic production of critical minerals.
Part of a Broader Strategy
The Critical Metals discussions follow a similar pattern with other mining companies. The U.S. recently took a 5% stake in Lithium Americas.
That deal delayed the Critical Metals negotiations. Washington has also taken a 15% stake in MP Materials.
The ongoing federal government shutdown is not expected to impact the talks. The negotiators working on this deal are considered essential government officials.
This marks the sixth day of the shutdown. Critical Metals stock has climbed 17.5% so far this year.
The company’s market capitalization stood at approximately $786.9 million as of the last close. Critical Metals aims to secure lithium and rare earth supplies for U.S. and European markets.
President Trump has previously suggested the United States should take over Greenland. He cited the island’s strategic location and rich mineral resources as key reasons.
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