Trump to utilize Pentagon artificial intelligence for setting mineral reference prices

The Trump administration has revealed its plan to utilize a Pentagon-developed AI tool to establish reference prices for critical minerals, mainly focusing on gallium and germanium. This initiative aims to combat Chinese market manipulation that currently affects the global minerals market. The AI program in question, known as DARPA’s Open Price Exploration for National Security (OPEN), was launched in 2023 to calculate the true cost of a metal by factoring in labor, processing, and other inputs while eliminating alleged Chinese interference.

Vice President JD Vance proposed implementing the OPEN pricing model as the foundation for a reference price system at a recent Critical Minerals Ministerial in Washington, attended by representatives from over 50 countries. The proposal includes setting reference prices for critical minerals at each production stage, enforced by adjustable tariffs. The administration intends to kickstart the use of the OPEN model with four minerals: germanium, gallium, antimony, and tungsten, focusing on their pricing and market dynamics.

Gallium and germanium are vital components in the tech industry, with gallium being used in compounds such as gallium nitride (GaN) and gallium arsenide (GaAs) found in RF chips and power electronics. On the other hand, germanium is utilized in chip doping, fiber optics, and high-speed microelectronics. China’s dominance in global germanium production, estimated at 60% to 80%, and the U.S.’s heavy reliance on China for approximately 95% of its gallium supply have raised concerns over supply chain vulnerabilities.

Beijing’s export restrictions on germanium and gallium have disrupted global supply chains and highlighted the importance of reducing dependency on Chinese minerals. The OPEN program targets metals that are thinly traded or not actively exchanged in markets, where manufacturers struggle to gauge true supply-demand scenarios amidst subsidized Chinese output. While the administration hopes that tariff-backed reference prices will stabilize the market, skepticism remains regarding their long-term effectiveness.

Nathaniel Horadam, a former U.S. Department of Energy official with experience in managing critical minerals programs, expressed doubts about the tariff-based pricing model. Despite attempts to set price floors, competitive pressures from multiple producers may undermine the efficacy of tariff walls in ensuring stable prices. The OPEN program is slated to be transferred to the non-profit Critical Minerals Forum next year, signaling a continued effort to address mineral supply chain vulnerabilities and market manipulation.