President Trump signed Presidential Determination No. 2026-19 on July 30, 2026, invoking the Defense Production Act to restrict exports of recovered critical minerals from spent batteries, permanent magnets, and industrial scrap. The Bureau of Industry and Security followed with a Temporary Final Rule imposing a 100% domestic sales requirement on black mass and tungsten scrap, effective August 27, 2026. The directive creates urgent new commercial pressure on a domestic recycling industry already weakened by high-profile bankruptcies and a near-total absence of U.S.-based hydrometallurgical processing capacity.
Introduction
On July 30, 2026, the Trump administration signed Presidential Determination No. 2026-19, a directive invoking the Defense Production Act of 1950 to grant Commerce Secretary Howard Lutnick authority to restrict the export of recoverable critical minerals and materials (CMMs) from industrial waste and end-of-life products. Published at 91 Fed. Reg. 50,465 on August 4, the order targets materials including spent lithium-ion batteries, battery black mass, end-of-life rare earth permanent magnets, tungsten scrap, and swarf. It is, in the administration's own framing, a declaration that secondary mineral streams deserve the same strategic protection as primary mine output.
The Bureau of Industry and Security moved quickly. On August 6, BIS published a Temporary Final Rule expressing the restriction as a 100% domestic sales requirement on two specific materials: black mass from the initial stage of lithium-ion battery recycling, and tungsten waste and scrap. The prohibition takes effect August 27, 2026, runs through August 27, 2027, and is open to adjustment and exception requests submitted on a rolling basis. A public comment period closes November 4, 2026, but the rule operates as final law in the interim.
The policy lands at a peculiar moment for American recycling. The domestic battery recycling sector spent the past eighteen months producing cautionary tales about the gap between strategic ambition and commercial reality, with Ascend Elements filing for Chapter 11 in April 2026 and Li-Cycle entering creditor protection in May 2025. The directive does not resolve that underlying fragility. It does, however, fundamentally alter the commercial incentives, forcing a reckoning with whether the United States can build the processing infrastructure to absorb what it is now legally forbidden to ship overseas.
What the Directive Actually Does: Scope, Legal Architecture, and the BIS Rule
The legal foundation is the Defense Production Act of 1950, a Korean War-era statute originally designed to redirect industrial output toward military needs. Successive administrations have stretched its reach considerably, and the July 30 determination continues that pattern. The presidential memorandum delegates authority to the Commerce Secretary rather than mandating specific restrictions directly, a structure that preserves regulatory flexibility while creating an explicit bureaucratic mandate to act. Commerce responded with unusual speed: the BIS Temporary Final Rule appeared within one week of the presidential determination.
The definition of covered materials is deliberately broad. The March 20, 2025 executive order's mineral list provides a baseline, but Commerce retains authority to designate additional minerals unilaterally, drawing from Department of Defense, USGS, and Department of Energy lists as well. In practice, the initial TFR focuses on two commodities where the strategic and commercial case is clearest: lithium-ion battery black mass and tungsten scrap. BIS explicitly describes this as the first allocation order restricting exports from the department, and notes it may foreshadow additional directives targeting other recoverable CMMs.
Black mass warrants a brief technical explanation for readers unfamiliar with the material. When spent lithium-ion batteries are mechanically shredded, the result is a heterogeneous dark powder containing recoverable quantities of lithium, cobalt, nickel, manganese, and graphite in varying proportions depending on battery chemistry. The term covers a wide range of compositions, but all black mass requires sophisticated downstream chemical processing, typically hydrometallurgical leaching, to yield battery-grade recovered materials. That processing step is precisely where U.S. capacity is most deficient.
The rule includes an adjustment and exception mechanism, allowing companies to petition Commerce for relief on a rolling basis through the duration of the one-year prohibition. Whether the adjustment process becomes a practical escape valve or a narrow administrative formality will depend heavily on how aggressively BIS interprets its mandate, a question the November comment period may help clarify.
The Tungsten Case: A Supply Chain Already at Breaking Point
Of the two materials covered by the initial TFR, tungsten scrap may be the more immediately consequential for the defense industrial base. Ammonium paratungstate (APT), the global benchmark price, was trading at roughly $300 per metric ton unit in early 2025. By early 2026, it had surged to between $1,700 and $1,800 per metric ton unit, a near-sixfold increase that outpaced every other critical mineral tracked across the same period, including tantalum (up 196%), cobalt (up 134%), and neodymium (up 116%).
The price shock traces directly to Chinese export controls. Beijing imposed licensing requirements on tungsten exports on February 4, 2025, as part of a broader retaliatory package responding to U.S. tariffs. Ryan McAdams of Amermin, an Austin-based tungsten recycler, was characteristically direct about the consequences: "China's February 2025 export controls triggered a 900 percent-plus increase in APT prices over the last 12 months," he told Recycling Today earlier this summer. Amermin had submitted a letter to Secretary Lutnick in March 2026 arguing that uncontrolled tungsten scrap exports represented an unacceptable risk to American industrial and military readiness, framing secondary material streams as strategically equivalent to primary mine production.
That framing has now been codified in federal regulation. McAdams welcomed the directive with unambiguous language: "Amermin applauds the U.S. Department of Commerce for its continued aggressive action to keep America's critical minerals in America. Domestic processors need reliable and consistent sources of tungsten scrap to secure investment in new capacity, and keeping this material in the U.S." is essential to that goal. The company's position reflects a broader consensus forming within the defense procurement community: with no operating domestic tungsten mine and Chinese suppliers under tightening export controls, recycled scrap is not a supplementary option but the only option available at meaningful scale before the January 1, 2027 federal deadline requiring defense manufacturers to cease sourcing critical minerals from Chinese suppliers.
The compressed timeline makes the stakes concrete. A component that cost $100 with a four-week lead time is now reportedly approaching $500 with a twelve-week lead time in some defense supply chains, according to an anonymous state industry source cited by IndustryWeek. The directive's proponents argue that retaining tungsten scrap domestically is a necessary precondition for stabilizing that situation. Its critics would note that retaining scrap is not the same as processing it.
The Black Mass Problem: A Policy That Mandates Capacity That Does Not Exist
Building on my analysis of the GAO technology assessment in July 2026's reporting on hydrometallurgical recycling, the science of extracting battery-grade materials from black mass is mature. The infrastructure to do it at scale in the United States is not. That asymmetry is the central tension the July 30 directive creates without resolving.
Historically, U.S. black mass has flowed to processing facilities in South Korea, Japan, and China for a straightforward reason: those are where the hydrometallurgical separation facilities capable of recovering lithium, cobalt, and nickel to battery-grade specifications are located. China held over 80% of global battery recycling capacity in 2023, and enacted a new national standard in July 2025 specifically designed to import black mass as a secondary raw material, creating a regulatory framework that actively solicited the material the United States is now prohibiting from export. CATL's Brunp subsidiary alone had 270,000 tons per year of waste-battery disposal capacity at the end of 2024.
The domestic alternative is, at present, largely aspirational. Building a hydrometallurgical facility capable of processing black mass to battery-grade output requires capital investment measured in the hundreds of millions of dollars per facility, with multi-year construction and permitting timelines. The GAO's July 22 assessment (GAO-26-108687) found that domestic battery recycling capacity is projected to take two to four years to double, and that the technology itself requires between two and at least ten years for U.S. industry to fully develop and deploy at meaningful scale.
The near-term bottleneck risk is genuine and acknowledged by legal analysts covering the TFR. Without export channels, black mass producers face a surplus of unprocessed material and no domestic buyer capable of taking it through to finished output. The result, in the worst case, is a domestic shortage of refined battery inputs occurring simultaneously with stockpiles of unprocessed scrap, the precise opposite of what the policy intends. Pillsbury Law's analysis of the BIS rule noted that the restriction poses particular challenges because there is very limited capacity in the U.S. to process black mass to recover critical minerals, with virtually all the world's refining capacity concentrated in Asia.
The bankruptcies of Ascend Elements and Li-Cycle illustrate how that capacity gap translates into commercial reality. Ascend, which had raised nearly $900 million from investors and received conditional DOE grants totaling $480 million before both were cancelled, filed for Chapter 11 on April 9, 2026, with CEO Linh Austin describing the company's financial challenges as "insurmountable." Li-Cycle entered creditor protection in Canada and the United States in May 2025 after cost overruns on its Rochester Hub facility despite a $475 million DOE loan commitment it was ultimately unable to draw down. Matt Cooper, vice president of business development at Singapore-based Green Li-ion, offered a measured epitaph: recycling companies failed "not because there was anything wrong with the company. It's maybe they couldn't hold their breath underwater that long."
Policy Architecture: Where July 30 Fits in a Season of Critical Mineral Directives
The July 30 determination did not arrive in isolation. It is the latest move in a rapid sequencing of executive actions that have collectively restructured the legal and commercial environment for critical mineral supply chains within a matter of months. Understanding where it sits in that sequence matters for assessing both its intent and its likely effect.
In January 2026, Trump signed an executive order directing negotiation of trading partner agreements addressing import dependence on processed critical minerals and derivative products. In March 2026, he invoked the Defense Production Act to expand domestic mineral production capacity, directing multiple cabinet agencies to identify potential production sites. On July 20, 2026, he signed "Securing America's Defense Supply Chains and Ensuring Domestic Acquisition of Critical Materials," which gave the Secretary of War 180 days to require defense contractors at every tier to map their supply chains and produce indentured bills of materials tracing components back to raw-material origin. That order also set the January 1, 2027 hard deadline on procurement from adversary nations including China, Russia, North Korea, and Iran.
On August 7, the U.S. Treasury welcomed new S&P Global reference price benchmarks for gallium, germanium, tungsten, antimony, neodymium, and praseodymium, a step designed to support broader critical minerals trade agreements. Peter Navarro, White House counselor, framed the overall posture with characteristic bluntness: "No more: 'we tried nothing and we're out of options.'" More substantively, he told reporters that a supply chain running through an adversary nation "is a strategic exposure, not an accounting detail."
The GAO's July 22 report (GAO-26-108687) provided the statistical scaffolding the administration has cited repeatedly. The USGS updated its critical minerals list in November 2025, expanding it from 35 to 60 minerals. Among the 11 minerals the GAO focused on as most strategically relevant to batteries and semiconductors, the United States is at least 41% import-dependent for each, and fully 100% dependent for five: arsenic, gallium, graphite, indium, and manganese. China accounts for approximately 70% of rare earth extraction and 90% of processing globally, and held China as a major source for 14 critical minerals in the 2025 data. China owns 99% of global gallium production. The White House has also noted that 67% of U.S. rare earth consumption in 2025 relied on imports, of which 71% came from China.
The EU is moving on a parallel track. European authorities have announced plans to implement comparable black mass export restrictions with an implementation target of November 2026, driven by the same logic: reduce dependence on Asian processing and secure battery materials for domestic defense and EV supply chains. Whether the convergence of U.S. and EU policy on black mass export controls within months of each other reflects formal coordination or independent strategic convergence remains unclear, but the alignment is notable.
Commercial Implications: Who Benefits, Who Faces Pressure, and What Happens Next
The directive reshapes the commercial calculus for several distinct categories of market participants in ways that are neither uniformly positive nor uniformly negative. For domestic recyclers that have invested in or plan to invest in downstream processing, the policy is a meaningful subsidy in the form of captive feedstock. If black mass cannot be exported, it must find a domestic buyer, which structurally improves the negotiating position of any U.S. facility capable of processing it. Ryan McAdams's enthusiasm at Amermin reflects this dynamic directly: predictable domestic feedstock supply is precisely what justifies capital commitment to new processing capacity.
For electronics recyclers and e-waste processors whose current business model depends on international offtake, the picture is more complicated. Export channels that previously operated without restriction will require Commerce Department licensing under the new framework, adding regulatory overhead and eliminating the flexibility to arbitrage international price differentials. Companies currently shipping lithium-ion black mass to South Korean or Japanese processors for hydrometallurgical treatment face the most immediate disruption, particularly given that black mass supply from U.S. sources has itself declined since peaking in the third or fourth quarter of 2025, according to a producer source cited by Fastmarkets.
Defense contractors stand to be indirect beneficiaries if the policy succeeds in its long-term objectives. Improved domestic access to recovered rare earth elements from end-of-life permanent magnets, for example, could ease the transition away from Chinese-sourced materials ahead of the January 2027 deadline. The July 20 executive order's supply chain mapping requirement, combined with the July 30 black mass restriction, creates a paired pressure: contractors must simultaneously document where their materials come from and operate in a market where domestically generated secondary material is no longer available for export. Ideally, that combination channels demand toward emerging domestic processors. In practice, the transition will involve friction measured in cost and lead time.
Michel Van Hoey, a senior partner at McKinsey focused on metals and mining, offered the most temperate assessment of what policymakers are asking the market to absorb: "Meaningful diversification will take longer than many anticipate." Neha Mukherjee of Benchmark Mineral Intelligence added a cost dimension specific to rare earth processing: "The heavier the rare earths, the higher the cost of refining," noting that China can process them "at a very low cost and very efficiently." Japan's experience provides a useful historical calibration: despite more than a decade of deliberate diversification effort, China still accounts for 76% of Japan's rare earth supply.
Conclusion: A Necessary Bet on Infrastructure That Does Not Yet Exist
Presidential Determination No. 2026-19 is, at its core, a wager. The administration is betting that restricting the export of domestically generated secondary mineral streams will create sufficient commercial incentive to attract the capital needed to build the processing infrastructure that currently does not exist, within a timeframe that is already uncomfortably short. The one-year duration of the initial TFR, with a comment period running through November 2026, suggests at least some acknowledgment that the policy will require calibration as its real-world effects become visible.
The GAO's assessment established clearly that the technology for hydrometallurgical processing of battery black mass is mature and commercially deployable within two to three years for key minerals. The barrier has always been capital allocation and market structure, not science. By mandating domestic retention of feedstock, the July 30 directive attempts to alter that market structure by administrative fiat, making the economics of domestic processing more attractive precisely because the alternative export channel is foreclosed. Whether that logic holds depends on how quickly the adjustment and exception mechanism gets tested, how aggressively BIS enforces the underlying prohibition, and whether the surviving domestic recycling sector can attract financing after the Ascend and Li-Cycle failures dampened investor appetite for the space.
The EU's parallel trajectory toward a November 2026 black mass export restriction adds an important dimension. If Western governments converge on similar restrictions within months of each other, the cumulative effect on the global black mass market could be substantial, potentially redirecting significant material flows and creating the demand signal that domestic processors need to justify large-scale capital investment. Formal coordination among allied governments on export controls has precedent in the semiconductor domain. Whether critical mineral recycling streams become the next domain for coordinated allied export policy is a question the coming months will begin to answer.
What is already clear is that the United States has made a formal declaration: the minerals embedded in discarded batteries and end-of-life industrial equipment are national strategic assets, not commodity scrap. The harder question is whether the industrial infrastructure needed to act on that declaration can be built fast enough to matter before the next crisis in the supply chain arrives.