On July 30, 2026, President Trump signed Presidential Determination No. 2026-19 under the Defense Production Act, delegating authority to the Commerce Department to restrict exports of recoverable critical minerals including battery black mass, rare-earth magnet scrap, and tungsten swarf. Six days later, the Bureau of Industry and Security issued an emergency rule locking the materials to domestic buyers starting August 27. The move marks a fundamental pivot in American mineral strategy: Washington is no longer just trying to dig more critical materials out of the ground. It is asserting sovereign claim over the strategic value embedded in what the country throws away.
Introduction
The warehouse sits on the eastern edge of Austin, Texas, unremarkable from the outside: corrugated metal walls, a loading dock, the faint chemical smell of industrial processing. Inside, workers feed spent drill bits and worn cutting inserts into a crusher, reducing them to a fine gray-black powder. That powder is tungsten carbide scrap, known in the trade as swarf, and for years most of it ended up on container ships bound for processors in China, South Korea, and Europe. The economics were simple. Overseas buyers paid well, domestic capacity was thin, and no one in Washington seemed to care.
That calculus changed on July 30, 2026, when President Trump signed Presidential Determination No. 2026-19 under Section 101 of the Defense Production Act, directing the Secretary of Commerce to restrict exports of recoverable critical minerals and materials. Six days later, the Bureau of Industry and Security published an emergency rule in the Federal Register without advance notice or public comment, citing urgent and compelling national security circumstances. Beginning August 27, 2026, all monthly sales of covered black mass and tungsten waste and scrap must be allocated exclusively to U.S. buyers. Exporters need prior BIS authorization to ship a single tonne offshore.
The rule runs for 386 days. It covers tungsten waste and scrap under a single Schedule B code and black mass under three separate codes tied to shredded lithium-ion battery material. It does not cover copper scrap, already addressed under a separate July 2025 proclamation. What it does cover, taken together, is a substantial slice of the secondary feedstock on which a generation of overseas rare-earth and battery processors has quietly come to depend. Washington has decided that feedstock is no longer available for export, at least not without asking permission first.
The Legal Architecture: A Korean War Statute Finds a New Enemy
The Defense Production Act of 1950 was written to prevent a repeat of the industrial chaos that briefly threatened American rearmament at the outset of the Korean War, when the Pentagon discovered it could not reliably procure the alloys and chemicals its weapons programs required. The statute gave presidents sweeping unilateral authority to direct private-sector production, allocate materials, and restrict their movement. For decades it remained a mostly dormant instrument, dusted off occasionally for genuine emergencies. Presidents Biden and Trump both reached for it during the pandemic, the supply-chain crises of the early 2020s, and the energy transition debates that followed.
Presidential Determination No. 2026-19 represents something more pointed. The White House's policy findings are explicit in their framing: recoverable critical minerals and materials are industrial resources necessary to promote national defense; U.S. reliance on imports of these materials threatens serious and sustained supply chain disruptions; and immediate action is imperative. Those findings are not rhetorical window dressing. They are the statutory predicate that unlocks the allocation authority Commerce needs to write binding rules without going through the Administrative Procedure Act's normal notice-and-comment cycle.
The legal architecture matters because it determines both the speed of implementation and the difficulty of legal challenge. By invoking the DPA's urgent-and-compelling-circumstances exception, BIS was able to move from presidential determination on July 30 to published final rule on August 6, a timeline that would be impossible under ordinary rulemaking. Industry groups that want to challenge the rule face the burden of arguing against a national security finding, a notoriously difficult posture in federal court. Constitution Partners, a Washington legal advisory firm, noted in a recent client bulletin that the combination of a Section 101 determination and an emergency BIS directive creates an unusually durable legal foundation for what amounts to a sweeping export control on secondary materials.
The Determination itself imposed no immediate restriction on anything. It was the legal foundation, the enabling document, on which Commerce would build its actual regime. That regime arrived in the form of the BIS temporary final rule, which is where the policy becomes operational and where the industry consequences begin to crystallize. A public comment window runs until November 4, 2026, giving affected companies the opportunity to request adjustments or exceptions, though the rule's emergency framing suggests Commerce is not expecting to be talked out of its core conclusions.
What Gets Caught in the Net, and What Doesn't
The covered materials fall into two distinct categories, each with its own industrial logic and its own supply-chain drama. The first is black mass, the name given to the shredded, crushed output of end-of-life lithium-ion battery processing. When a battery pack from an electric vehicle or a consumer electronics device reaches the end of its useful life and passes through a shredder, the result is a dense, dark powder carrying recoverable concentrations of lithium, nickel, cobalt, and manganese. Those metals are the building blocks of new battery cathodes, and they are also the minerals at the heart of the Western world's increasingly anxious relationship with Chinese industrial policy.
U.S. black mass exports across the three covered Schedule B codes totaled 46,693 tonnes in the first half of 2026, against 100,667 tonnes for all of 2025, suggesting a pace of roughly 93,000 tonnes on an annualized basis. Before August 27, the bulk of that material was flowing to overseas hydrometallurgical processors, many of them in Asia, that had built their business models around affordable secondary feedstock. After August 27, all of it needs a domestic buyer or an export authorization from BIS.
The second category is tungsten waste and scrap, a materially different commodity with its own strategic significance. Tungsten is used in cutting tools, armor-piercing ammunition, radiation shielding, and aerospace components. China controls roughly 80 percent of global tungsten production and has been tightening its grip on exports since February 2025, when Beijing introduced export controls that substantially increased global tungsten prices. U.S. tungsten waste and scrap exports totaled 2,183 metric tonnes in the first six months of 2026, already nearly matching the 2,202 tonnes exported during all of 2025, a pace suggesting the market was accelerating ahead of anticipated restrictions.
The rule does not cover copper scrap, which was addressed under Proclamation 10962 signed exactly one year earlier, on July 30, 2025. It also does not immediately extend to the broader universe of end-of-life rare-earth permanent magnets and other manufactured goods containing critical minerals, though the Presidential Determination's language is broad enough to encompass them, and the rule explicitly notes that Commerce may consider further directives on additional substances. In other words, what was published on August 6 is the opening position, not the final one. As I reported in my analysis of the July 30 Presidential Determination, Washington is now treating the secondary minerals stream as a sovereign resource, and the BIS rule is the first concrete expression of what that means in practice.
The January Cliff: Defense Contractors Running Out of Time
The BIS export rule did not arrive in isolation. It landed inside a broader policy environment that is becoming increasingly uncomfortable for defense prime contractors and their multi-layered supplier networks. On July 20, 2026, ten days before the Presidential Determination, Trump signed Executive Order 14415, titled Securing America's Defense Supply Chains and Ensuring Domestic Acquisition of Critical Materials. That order sets a hard deadline of January 1, 2027, after which the Department of Defense will stop issuing waivers for rare earths, magnets, tungsten, molybdenum, and tantalum sourced from China, Russia, Iran, or North Korea.
The gap between the policy ambition and the industrial reality is, to put it gently, enormous. U.S. demand for neodymium-iron-boron magnets, the workhorse permanent magnets used in electric motors, wind turbines, and precision-guided weapons, reached roughly 48,000 tonnes in 2025, according to Arthur D. Little data. Domestic sources supplied approximately 300 tonnes. Even if U.S. magnet production capacity reaches its projected 5,000 tonnes by the end of this year, that represents barely ten percent of national demand. The arithmetic does not close before January 1.
Nick Myers, CEO of Phoenix Tailings, a Massachusetts-based minerals startup that recently received a 500 million dollar loan from the Department of Defense to build a processing facility, was blunt about the situation. "Defense contractors have just assumed they can keep buying Chinese products," he told the Institute for Energy Research. The observation cuts to the heart of what the executive order is trying to force: a reckoning that years of policy exhortation had failed to produce. Companies seeking waivers after January 1 will have to demonstrate exhaustive efforts to source from compliant countries and provide a documented timetable for removing non-compliant supply from their chains. Companies that cannot qualify will face contractual consequences.
Peter Navarro, the White House counselor who has been the intellectual architect of much of the administration's supply-chain nationalism, framed the stakes in characteristic terms. A supply chain that runs through an adversary nation, he said, is a strategic exposure, not an accounting detail. The observation is strategically sound and operationally inconvenient in equal measure. Chris Berry, a minerals industry analyst who has followed these markets for more than a decade, told Reuters that it will take many more years to get the needed infrastructure in the ground to compete with China's entrenched processing dominance. The January deadline, he suggested, risks producing compliance theater rather than genuine supply-chain transformation.
The Capacity Contradiction: More Scrap, Not Enough Plants
Ryan McAdams, the founder and CEO of Amermin, the Austin-based tungsten recycler whose March 2026 letter to Commerce Secretary Lutnick helped catalyze the export control push, was unambiguous in his welcome of the rule. "The President and Secretary Lutnick deserve real credit for recognizing that recovered material is strategic supply and for drawing the definition of covered material broadly," he told Recycling Today. His company, he projected, could at full campus build-out supply roughly 18 percent of estimated annual U.S. tungsten carbide consumption. That figure matters because it illustrates both the opportunity and the ceiling: one well-capitalized domestic recycler at full capacity would still leave the country dependent on other sources for more than four-fifths of its needs.
The capacity problem takes different forms depending on the material in question. For tungsten, the concern is that domestic refiners cannot absorb all the scrap that will now be legally prevented from leaving the country. Cliff Nance, CEO of Tungco, opposed the export ban before the rule appeared, arguing precisely this point: the pipe cannot hold the volume that policy is now directing through it. If domestic tungsten carbide processors lack sufficient throughput, the material will need to be warehoused, adding carrying costs to recyclers that are already operating on thin margins. The Department of Energy projects that U.S. black mass refining capacity will double over two to four years, but the export ban window is twelve months. The gap between projected capacity and mandated redirection is real and financially meaningful.
Green Li-ion, a battery recycling technology company, captured the market logic with precision. "The federal government has just told the market that the raw recoverable critical minerals stream flowing out of the United States as unfinished intermediates is now a national security concern, and that authority exists to restrict its export." The signal, the company argued, should accelerate private investment in domestic hydrometallurgical processing, a sector that has chronically underinvested relative to the demand signals coming from the energy transition and now from defense policy. Whether that investment materializes quickly enough to absorb the restricted feedstock is the defining near-term question.
The likely structural outcome, analysts suggest, is consolidation. Defense prime contractors facing the January 2027 deadline have strong incentives to acquire upstream processors in order to control their own compliance documentation. Smaller recyclers that cannot secure domestic offtake agreements will face financial pressure. The industry that emerges from this policy moment will probably be more concentrated, more vertically integrated, and considerably more expensive than the one that preceded it. That may be precisely what Washington intends: an industrial structure where the strategic materials flowing through U.S. recycling streams are tightly coupled to the defense industrial base rather than drifting offshore as commodity intermediates.
China's Shadow and the Global Supply Context
No serious account of the July 30 Presidential Determination can avoid the adversary whose dominance it is designed to counter. China refines 91 percent of the world's rare earths, according to the International Energy Agency. It controls roughly 80 percent of global tungsten production and dominant shares of antimony and graphite. Multi-institutional analysis of the 2025-2026 export control period documents sixfold price spikes in some categories and licensing approval rates below 25 percent for materials subject to Chinese controls, meaning that three-quarters of applications for export authorizations were simply denied.
The price and availability shocks of 2025 were not abstract. When China announced export controls on seven categories of medium and heavy rare earths in April of that year, the disruption hit manufacturers within weeks. Ford's Chicago assembly plant closed temporarily in June 2025 as magnet supply dried up. Automakers across Europe and Asia found themselves scrambling for allocations. The abruptness of the disruption gave Washington's more hawkish supply-chain voices exactly the evidence they needed: dependency on Chinese processing is not a theoretical vulnerability, it is an operational one.
China's Ministry of Commerce added further pressure in recent weeks by placing ten U.S. entities, including MP Materials and USA Rare Earth, on its export control list, a move that underscored the degree to which the bilateral relationship has moved from commercial competition to open strategic contest. As I documented in my August analysis of the IEA's 2026 Global Critical Minerals Outlook, the November expiration of China's one-year suspension of its most sweeping rare-earth export controls looms over every policy calculation in this space. The suspension bought the Western supply-chain diversification effort some breathing room. Its expiration could reproduce the 2025 disruption on an even larger scale.
Against that backdrop, the July 30 Presidential Determination and the August 6 BIS rule read as defensive measures as much as affirmative industrial policy. They are attempts to prevent the country's own secondary materials stream from reinforcing the processing infrastructure of the adversary whose leverage Washington is simultaneously trying to reduce. Whether keeping black mass and tungsten scrap at home accelerates the build-out of domestic capacity, or simply creates a bottleneck that enriches no one, will depend on investment decisions that no executive order can compel.
Conclusion: The Scrap Heap as Strategic Reserve
Back in the Austin warehouse, the tungsten powder that once headed for a container ship now waits for a domestic buyer. The economics of that transaction are changing in real time: Chinese export controls pushed tungsten prices sharply higher through 2025 and into 2026, and the BIS rule will push domestic scrap prices in the same direction by restricting the supply available to offshore buyers. For Ryan McAdams and Amermin, that combination represents a long-awaited vindication of the case they made in their March letter to Commerce. For Cliff Nance and the processors who worried about being overwhelmed by redirected feedstock, it represents a different kind of reckoning.
The July 30 Presidential Determination is not the end of a policy process. The BIS rule it enabled runs for 386 days and comes with a comment window that closes November 4. Requests for adjustments and exceptions are actively solicited. The broader language of the Determination signals that additional materials, including end-of-life rare-earth permanent magnets, may follow. The January 1, 2027 deadline for defense contractor compliance creates a second, parallel pressure point that will test whether the industrial capacity being encouraged by policy can actually materialize in the time available.
What the administration has accomplished in the span of a single week in late July is to establish, in durable legal form, a principle that will shape American mineral policy for years regardless of how the implementation details resolve. The secondary minerals flowing through U.S. recycling and manufacturing streams are national security assets. They are not simply commodities to be sold to whoever offers the best price. That principle, once embedded in a Defense Production Act determination, is difficult to unwind and easy to extend. The scrap heap, it turns out, is strategic territory, and Washington has just planted its flag.