WASHINGTON — Mining companies backed by billions of dollars in support from the Trump administration are facing a new risk: heightened scrutiny after the Democrats’ midterm sweep.

Even before a blue wave overtook Congress, Democratic lawmakers were questioning the methods used for President Donald Trump’s push to rebuild the nation’s critical minerals industry. His administration made a flurry of unconventional financing arrangements — including taking equity stakes and issuing stock warrants — to support mining and processing companies in a bid to lessen reliance on China.

Some of the beneficiaries of Trump’s deal-making bonanza, including USA Rare Earth Inc., Vulcan Elements Inc. and Kaz Resources, were singled out by Democratic lawmakers, including Massachusetts Sen. Elizabeth Warren, earlier this year over potential conflicts of interest from their connections to the Trump family and Commerce Secretary Howard Lutnick.

The deals have drawn criticism even from within the Republican Party. Former Sen. Pat Toomey pointed to the rare-earth agreements in a post on X on Thursday.

“We all seem to oppose government-owned grocery stores,” he said. “But are we ok with government ownership of semiconductors companies and rare earth miners?”

Cutting Deals

USA Rare Earth, which is seeking to build a rare earth mine and processing plant in the U.S., landed a $1.6 billion agreement with the Commerce Department in January. The deal includes a roughly 10% government equity stake. The company selected Cantor Fitzgerald, the investment bank previously run by Lutnick and now led by his sons, as the lead placement agent for a separate $1.5 billion private stock offering.

Vulcan Elements, a privately held rare-earth company, secured a $620 million conditional loan commitment from the Pentagon and a $50 million equity investment from the Commerce Department just months after 1789 Capital, a venture capital company where Donald Trump Jr. is a partner, acquired a stake in the company.

USA Rare Earth and Vulcan Elements didn’t respond to requests for comment.

Since Trump entered office, the administration has also taken equity stakes in rare-earth miner MP Materials Corp. as well as Lithium Americas Corp. and Trilogy Metals Inc. The U.S. government is also backing a project from Korea Zinc Co., the world’s largest producer of silver, in Tennessee.

Kaz Resources, which has received preliminary indications of support for as much as $1.6 billion from the U.S. government, also counts Trump Jr. and Eric Trump among its passive investors. The brothers acquired indirect interests in the Kazakhstan tungsten venture through a series of transactions involving Dominari Holdings. The miner plans to go public through a direct listing next year.

“Since 2023, we have worked closely with US officials to secure a generational asset that will secure an independent tungsten supply chain for the West,” Kaz Resources said in a statement, adding it welcomed any questions from US officials.

A Bipartisan Push

Many critical minerals companies have enjoyed bipartisan support for reducing U.S. dependence on foreign mineral supplies. The Biden administration also deployed billions of dollars for domestic mining and processing, including backing Lithium Americas’ Thacker Pass project in Nevada. Republicans and Democrats in the House of Representatives voiced support for the Trump administration’s 2025 deal with MP Materials, which was seen as a way to spur rare earth production outside China.

“These initiatives are essential for Western industrial resilience and national security,” said Pavlo Verkhniatskyi, a managing partner at the corporate intelligence firm COSA. “Investigations and political controversy could complicate financing, delay investment decisions, and slow strategically important initiatives.”

The current administration has argued that the U.S. must secure alternative sources of materials in an industry dominated by China. The Asian country’s control over mining and processing has become a concern for Washington amid trade tensions and geopolitical competition.

But the dramatic expansion of the federal government’s role in the critical minerals industry has raised concerns about how some deals were negotiated and whether politically connected businesses received preferential treatment.

Under the Microsope

Democratic lawmakers, including Rep. Jared Huffman of California and Sen. Martin Heinrich of New Mexico, have already called for greater transparency around the administration’s investments in mining and minerals companies. They’re seeking details about how recipients were selected, the legal authority used to make the investments and what safeguards were put in place to protect taxpayers.

“By privileging select corporations through direct ownership — essentially picking winners and losers — the government may undermine broader market competition and the development of innovative technologies or mineral or material substitutions,” Huffman and Heinrich, the top Democrat on the Senate energy committee, wrote alongside Rep. Robert Garcia, the top Democrat on the House oversight committee, in a February letter to the Trump administration.

The risk is that Democrats wield their control of congressional committees to hold hearings, subpoena documents and investigate the administration’s selection of investment recipients. They could also use the appropriations process to challenge future funding and push for greater disclosure around the government’s growing portfolio of private-sector investments.

Still, the change in congressional control is unlikely to unwind agreements already signed or claw back money that has been legally obligated.

“I don’t think the intent is necessarily to break existing binding legal contracts,” said John Miller, a TD Cowen analyst. Republicans have used similar tactics, he noted. In 2023 for example, House Republicans launched broad investigations into the Biden family’s financial dealings.

But companies with transactions where federal support remains conditional or agreements that have yet to be finalized face greater uncertainty as lawmakers examine the administration’s decisions.

“My view is that there will be a pause on these plans as some of the previous deals are looked at more carefully,” said Ed Meir, a consultant at Marex.

(Ari Natter contributed to this report.)

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