Strategic Expansion in Critical Resources: New Directions for U.S. Sovereign Wealth Fund Investments

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By Salar Ghahramani

We continue to track the latest developments impacting the plans for the proposed U.S. sovereign wealth fund, along with forward-looking assessments of the policy and market implications of a resource-backed SWF. In March 2025, GPA published two reports--"Capital, Strategy, and Governance: The Market Implications of a DFC-Managed Sovereign Wealth Fund" (March 25) and "Strategic Metals, Rare Earths: The Role of Development Finance Corporation in a Resource-Backed U.S. Sovereign Wealth Fund" (March 27).

Our March reports anticipated the growing importance of critical resources in the context of U.S. economic policy and provided early insights into how a resource-backed SWF could operate.

These assessments have been confirmed, as Interior Secretary Doug Burgum, speaking at a recent conference, highlighted the growing importance of critical minerals—including lithium, cobalt, and rare earths—and potential plans for the U.S. sovereign wealth fund to invest in domestic miners.

Perhaps not coincidentally, just yesterday the U.S. Geological Survey issued a report titled "U.S. Geological Survey Global Seabed Mineral Resources," identifying significant seabed mineral deposits rich in elements critical to energy production and defense, such as nickel, cobalt, and manganese.

A Resource-Backed Sovereign Wealth Fund: The National Security Rationale

As the U.S. seeks to reduce its dependency on foreign suppliers of critical minerals, the proposed sovereign wealth fund offers an innovative approach. The fund could bolster U.S. mining operations and help ensure a stable supply chain. This initiative could align with the federal government’s recent exploration efforts, as outlined by the DOI’s commitment to deep-sea mining and rare-earth extraction in the U.S. Exclusive Economic Zone (EEZ). However, there are significant environmental protection concerns, with national security implications of their own, that must also be considered.

As we have noted in the past, the Development Finance Corporation (DFC) could play a pivotal role in managing the US SWF. Given its mandate to foster economic development and national security, the DFC is well-positioned to direct investments in the resource sector while balancing risk with long-term value creation.

Governance and Market Implications

The U.S. government’s involvement in critical mineral markets may trigger debates over the governance of the proposed sovereign wealth fund. It will be crucial for the SWF to operate independently from political pressures, focusing on long-term stability rather than short-term political gains. Questions surrounding the interaction of government policies with private market dynamics will likely shape the governance framework for the proposed SWF.

The introduction of a resource-backed SWF also raises important market and geopolitical considerations. Strategic investments in minerals like lithium and rare earths could dramatically impact global markets, especially as demand for clean energy technologies and other mineral uses grows, and the international and oceanic exploration of these resources will almost certainly introduce geopolitical tensions along the way.

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