Trump keeps investing millions of government money in one essential industry (and it’s not AI chips)

If you’ve sold equity in your company at some point, you’re probably used to keeping track of your cap table and knowing which shareholders have how big of a stake.

But how would you feel about the U.S. government taking a sizable chunk of your business too?

That’s the increasingly common reality for a growing number of U.S. companies, a new analysis by The New York Times finds—and for all the chatter over the summer about the feds moving to own almost 10% of Intel, computer chips aren’t the only sector seeing increased governmental involvement.

Instead, it’s the minerals, metals, and mining industry that comes up again and again in The Times’s breakdown of where the Trump administration is making money moves. Included on that list are investments made by the Department of Defense ($400 million in the mining company MP Materials; $35.6 million in Trilogy Metals; $80 million in mineral refiner ReElement Technologies; $620 million in rare earth magnet manufacturer Vulcan Elements) as well as the departments of Commerce (another $50 million in Vulcan Elements) and Energy ($182 million in deferred debt service with Lithium Americas).

That’s not to mention the government’s “golden share” in U.S. Steel, its option to take a future 8% stake in the nuclear power company Westinghouse, or of course, the 9.9% stake in Intel, priced at $8.9 billion, that came out of the deal this summer.

The companies in which Trump is pushing for federal investment tend to be those deemed vital to national security, which is no surprise when you look at the sectors being prioritized: metals and mining, nuclear power, semiconductors.

“If business-as-usual policies worked, America would not be reliant on foreign countries for critical minerals, semiconductors, and other products that are key for our national and economic security,” an administration spokesperson said.

Still, it’s an unusual move by the typically free market-focused Republicans, with The Times estimating that more than $10 billion in taxpayer money has already been dedicated to these investments (with more expected to be on the way).

“Some officials are hopeful the equity stakes will generate a windfall for taxpayers, but the likelihood of that is unclear,” the report reads. “Many of the companies are facing financial headwinds, and some could take years to become profitable.”

Critics have also raised concerns that these investments could create room for corruption and backroom dealings. The Times analysis did not look at stakes taken by the government’s Development Finance Corp., which more typically invests in private firms.

—By Brian Contreras

This article originally appeared on Fast Company’s sister publication, Inc.

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source https://www.fastcompany.com/91463878/trump-investing-federal-funds-mining-minerals