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By Salar Ghahramani
The March 20, 2025 executive order issued by the White House, focused on immediate measures to increase American mineral production, may signal more than just industrial policy. While the EO makes no explicit mention of a U.S. sovereign wealth fund, Global Policy Advisors LLC assesses that the language—and timing—suggest a broader strategic ambition: positioning critical materials and rare earths not only as inputs for national security and clean energy, but as a funding base for a state-managed investment vehicle. Global Policy Advisors LLC, in its SWF 2050™ framework, has previously outlined the Development Finance Corporation (DFC) as a potential institutional home for a U.S. SWF. This latest executive order aligns with that vision and reinforces the likelihood of a resource-backed fund structure, potentially anchored in critical material royalties, state-sponsored supply chain investments, and global joint ventures. Beyond domestic extraction, there is subtle language hinting at Ukraine’s mineral deposits—possibly shaping future strategic access or investment rights as part of bilateral agreements. Market observers will note that rare earth narratives are increasingly intertwined with geopolitical leverage, commodity diplomacy, and sovereign capital formation. This SWF 2050™ Report explores the possible role of rare earths and critical materials in shaping the funding model for a U.S. sovereign wealth fund, and the strategic case for situating that fund within the DFC. Key Themes Explored in This Report 🔹 The Executive Order: Strategic Finance by Other Means The March 20, 2025 executive order titled Immediate Measures to Increase American Mineral Production outlines a sweeping directive to boost domestic extraction, processing, and refining of critical minerals and rare earths. It tasks the Department of the Interior, Department of Energy, and Department of Defense with accelerating permitting processes, expanding federal investment in mineral exploration, and coordinating with private sector actors. The Defense Production Act (DPA) is invoked explicitly to ensure expedited federal authority in mobilizing resources for mineral development. What’s said—and what’s implied: While the EO emphasizes domestic supply chain resilience and reducing dependence on foreign sources (particularly China), its broader implications suggest a strategic financial dimension. Terms such as “national interest,” “federal coordination,” and “investment incentives” imply the potential for a centralized framework that not only manages supply but leverages it. Though no sovereign wealth fund is named, the EO’s structure invites interpretation as a foundational step toward monetizing these resources through a federal investment vehicle. This interpretation reflects GPA’s independent assessment of the policy direction embedded in the order. Defense Production Act as financial mobilizer: The DPA, originally a Korean War-era statute, is increasingly being used as a policy lever not just for defense production, but for industrial planning. Its use here echoes pandemic-era applications, where the federal government directly invested in vaccine and equipment manufacturing. In the context of minerals, invoking the DPA may allow the government to acquire assets, provide direct financing, or create offtake agreements—each of which could generate revenue streams that are, in theory, capitalizable into a sovereign investment vehicle. For institutional investors, this sets a precedent for new forms of public-private engagement—particularly in upstream resource finance. 🔹 The DFC Link: Reinforcing GPA’s SWF 2050™ Institutional Framework The March 20, 2025 executive order underscores the increasing centrality of the U.S. International Development Finance Corporation (DFC) in mineral and supply chain strategy. Notably, the EO assigns a significant role to the DFC’s Chief Executive Officer, who is directed to coordinate directly with multiple agencies, including the Departments of Defense, Energy, Interior, and State. This interagency directive enhances the CEO’s operational authority, signaling that DFC will play a pivotal role in implementing national resource policy—not simply as a passive finance vehicle, but as a strategic hub for deployment of capital across mission-aligned priorities. As per our previous reports, the agency’s investment toolkit—ranging from equity and debt financing to risk insurance—already positions it to deploy capital in strategic sectors. Embedding the SWF within DFC would allow for integrated governance and streamlined public-private partnerships. It also enhances interagency visibility into how capital is allocated across mission-critical industries. Private equity and infrastructure funds could operate under DFC’s institutional umbrella through co-investment models or external mandates, with DFC ensuring that capital deployment aligns with U.S. national interest and supply chain security. The DFC-hosted SWF would combine sovereign credibility with market fluency, and offer investors a clear regulatory channel through which to partner with the U.S. government on next-generation strategic industries. 🔹 Funding a U.S. Sovereign Wealth Fund via Mineral Royalties As federal policy turns toward resource development as a pillar of national strategy, the potential to monetize critical materials and rare earths through royalties and lease payments emerges as a credible pathway to fund a U.S. sovereign wealth fund (SWF). Under existing law, federal lands already generate royalties for the U.S. Treasury through oil, gas, and mineral leases. Expanding and modernizing these mechanisms for rare earths and other critical materials—particularly those identified in the March 20, 2025 executive order—could establish a long-term, recurring revenue stream to anchor sovereign investment. Historically, many sovereign wealth funds have been funded through resource windfalls. Norway’s Government Pension Fund Global, Saudi Arabia’s Public Investment Fund, and Chile’s Economic and Social Stabilization Fund are prominent examples of states that have capitalized on national commodities to build financial reserves. In each case, the SWF acts not only as a savings mechanism but also as a strategic investment arm aligned with the country’s long-term interests. The U.S. government could replicate this model by establishing revenue-sharing agreements for the extraction of critical materials from federal land and securing long-term offtake agreements with private partners. These agreements, if structured appropriately, could also be securitized—allowing the U.S. to raise upfront capital through bond issuance or other financial instruments backed by future royalty flows. 🔹 Ukraine, Rare Earths, and U.S. Strategic Access The strategic relationship between the United States and Ukraine has increasingly expanded beyond military and humanitarian support to include economic and industrial cooperation. While the March 20, 2025 executive order does not explicitly name Ukraine, its broader context, coupled with previous reports and diplomatic signaling, suggests that access to Ukraine’s rare earth and critical mineral resources could become an unspoken component of ongoing bilateral engagement. Ukraine is known to have significant rare earth potential, though its resource base remains underdeveloped due to years of conflict and limited capital investment. Recent commentary and speculation—including assertions of U.S. interests in Ukrainian mining rights—point to a growing interest in using Ukraine’s mineral base as part of the strategic calculus for postwar reconstruction and Western industrial diversification. Concurrently, Russian sovereign wealth entities have reportedly expressed interest in these same assets, framing the competition as part of a broader geopolitical struggle for control over strategic supply chains. For Western institutional investors, the prospect of future co-investments or public-private partnerships tied to Ukrainian mineral projects—potentially guaranteed or facilitated through U.S. sovereign mechanisms—presents both opportunity and geopolitical risk. Such access could prove critical not only for commercial returns but for reshaping the rare earth landscape in a post-conflict global order. 🔹 Market Implications for Investors A U.S. sovereign wealth fund backed by critical minerals and housed within the Development Finance Corporation would introduce a new institutional player into sectors already characterized by limited supply, opaque pricing, and high geopolitical sensitivity. For institutional investors, this presents both a signal and an opening. Public-private positioning will be key. Asset managers, infrastructure funds, and mining-oriented private equity firms could benefit from co-investment channels or indirect exposure to sovereign-backed projects. The DFC's credibility and oversight mechanisms could also derisk early-stage investments in emerging markets or politically sensitive jurisdictions, particularly if backed by long-term offtake agreements or federal guarantees. Moreover, a federally anchored buyer or investor in critical minerals would likely shift pricing power, affect global deal flow, and influence supply chain strategies. Investors should anticipate new policy tools such as mineral-backed bonds, preferred supplier arrangements, or expanded use of export credit facilities. The result may be a tighter, more government-shaped market for key inputs across defense, energy, and technology sectors. Looking ahead, capital allocators in private equity, infrastructure, and commodity trading will need to incorporate sovereign intent and regulatory shifts into their underwriting models. The alignment of federal industrial policy with sovereign capital formation marks a structural evolution in how the United States may pursue economic security—and how markets will participate. Full briefings are available to existing clients. Please contact us here for further details. Comments are closed.
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SWF 2050™
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