The U.S. government just made another interesting investment.

This time it wasn’t in artificial intelligence, semiconductors, or a new weapons system. The Pentagon is investing $65 million in a company that makes iron.

That might not sound like the beginning of the next great technology race, but Hertha Metals isn’t making ordinary iron. The company plans to build a $100 million facility in Texas capable of producing 10,000 metric tons annually of the high-purity iron used in powerful rare-earth magnets.

And here’s the number that explains why Washington is getting involved: 94% of the iron currently used in those magnets comes from China.

Rare-earth magnets are buried inside some of the most important technologies in the world. They’re used in F-35 fighter jets and missile-guidance systems. They’re also critical to electric vehicles, drones, industrial equipment, and the motors and actuators that will power humanoid robots.

If you’ve been following The First Move, you know how bullish I am on many of those trends. But there’s a problem.

America doesn’t control enough of the supply chain needed to build them.

Washington Digs Deep

The Hertha investment isn’t happening in isolation. In fact, it’s just the latest example of something much bigger.

Over an 18-month period ending this summer, the U.S. government committed approximately $7.6 billion across more than 180 critical-mineral projects. That’s more than four times the support provided from 2020 through 2024.

And Washington isn’t just handing out research grants anymore.

Last year, the Defense Department agreed to invest $400 million in MP Materials (MP), owner of the Mountain Pass rare-earth mine in California. The government also provided a $150 million loan for heavy-rare-earth separation, a long-term price floor for certain rare-earth products, and a 10-year magnet-purchase commitment.

Then there’s USA Rare Earth (USAR). The company finalized agreements this summer providing access to as much as $277 million in federal funding and $1.3 billion in senior secured loans as it works to build an integrated U.S. mine-to-magnet supply chain.

And Vulcan Elements, a private U.S. magnet manufacturer, has been lined up for a $620 million Pentagon loan to dramatically expand domestic magnet production.

Add it all together and the message is difficult to miss.

The U.S. government wants an American rare-earth industry, and it appears willing to spend billions of dollars to build one.

The Pentagon Goes on the Record

Perhaps the most fascinating development happened just this week.

Dateline Resources (DTREF) is developing the Colosseum project in California, located only about 10 kilometers from MP Materials’ Mountain Pass operation. Work at the site was halted in August after an environmental group won a preliminary injunction.

Normally, that would be a fight between the company and the environmental group.

Not this time.

The U.S. Justice Department has now filed its own motion seeking to pause the injunction. Even more striking, a senior Pentagon official submitted a sworn declaration arguing that blocking rare-earth exploration at Colosseum harms U.S. national security. The environmental group is opposing the government’s position, and the matter is scheduled for an October hearing.

Think about that.

Washington isn’t simply funding rare-earth projects anymore. It’s buying equity. It’s making loans. It’s guaranteeing purchases. It’s supporting prices. And now the federal government is showing up in court arguing that rare-earth exploration is a matter of national security.

That’s a pretty powerful signal that this trend is alive and well.

A Lot of Kinks to Iron Out

China spent decades building an enormous advantage across rare-earth mining, refining, metals, and magnet manufacturing. America can’t recreate that entire ecosystem overnight simply by throwing billions of dollars at it.

In fact, that’s becoming the next challenge.

Rare Earth Exchanges calls it the “Transition Vulnerability Window.” Mines, processing facilities, and magnet factories take different amounts of time to build and qualify. America could dramatically increase its supply of raw materials and still lack enough processing capacity or finished magnets to meet demand. Heavy rare earths remain a particularly important vulnerability.

To me, that’s not an argument that the investment theme is ending.

It’s an argument that it could last much longer than many investors realize.

Washington’s goal is increasingly bigger than opening a few mines. The U.S. is attempting to rebuild an entire supply chain, from mining and separation to metals and finished magnets.

And that supply chain sits underneath several of the biggest investment trends I follow.

AI is moving into the physical world. Humanoid robots and drones will require dozens of motors. Electric vehicles require powerful magnets. Advanced weapons require specialized materials.

Silicon Valley may design the future. AI may provide its intelligence.

But somebody still has to provide the materials needed to actually build it all.

And with $7.6 billion already committed across more than 180 projects, Washington is making it increasingly clear that it doesn’t want those materials coming from China.

That’s why America’s rare-earth buildout is far from over.

It’s only getting started.