According to a report by Reuters cited on Mining.com, three sources familiar with the matter revealed that the Trump administration plans to use an AI model developed by the Pentagon to deduce reference prices for critical minerals for its proposed "Global Metal Trading Zone".

Earlier this month, U.S. Vice President Vance proposed that the United States and more than 50 other countries should accept "reference prices for critical mineral products with different degrees of processing," supplemented by "adjustable tariffs to maintain the systematic nature of pricing.

These sources revealed that the reference prices for key mineral products will be determined by the Open Price Exploration for National Security (OPEN) AI Metals Program of the US Department of Defense (DoD).

While there are still doubts about whether AI technology can reconfigure the way critical minerals are bought and sold, this move warrants vigilance regarding government intervention in market prices.

The OPEN program was launched by the Pentagon's Defense Advanced Research Projects Agency (DARPA) in 2023, aiming to estimate reasonable metal pricing considering labor, processing, and other costs.

Sources revealed that officials in the Trump administration initially focused the OPEN AI pricing model on four minerals: germanium, gallium, antimony, and tungsten, before expanding it to other minerals. S&P Global and Finnish data company Rovjok provided data and other technical assistance.

The White House, the Department of Defense, S&P and Rovjok did not respond to requests for comment.

As this plan is introduced, the U.S. government is rapidly deploying AI tools in other areas, including the use of generative artificial intelligence in battlefield environments through partnerships with OpenAI, Anthropic, and Alphabet's Google.

Focus on metals with scarce trading volume

The OPEN program will be transferred to the non-profit organization Critical Minerals Forum (CMF) for operation next year, and has focused on metals with little or no trading from the very beginning.

CMF stated that its focus has always been on "collaborating with government-funded partners to conduct stress tests using artificial intelligence models" and "identifying and supporting commercially viable mining and processing projects rather than government policies.

AI models aim to facilitate metal supply transactions between Western miners and manufacturers by providing both parties with more pricing certainty.

For manufacturers that use germanium, antimony, gallium and other minerals, this is a bit difficult. For example, the price of antimony set by OPEN and supported by U.S.-led trading partners can increase the profits of companies developing U.S. antimony projects, but it may raise the costs of automakers that use antimony in adhesives and other products.

It is currently unclear whether AI-derived prices are floating or fixed, nor is it clear whether they will be set between the United States and individual allies or applied across entire trade organizations.

The implementation timeline is also unclear, as the U.S. government must first persuade dozens of allies to join the organization to ensure its effectiveness.

Canada's Ministry of Energy and Natural Resources said it is "working to fully understand and analyze" the U.S. proposal.

Reliable investment system

Although many mining companies sought support for a floor price, the Trump administration has abandoned the floor price policy due to a lack of congressional support. Therefore, the U.S. government has put forward the idea of a reference price.

Eric Robinson, special counsel at Baker Botts and former managing director of the Pentagon's Office of Strategic Capital, said, "The government still sincerely hopes to meet industry needs by building a reliable investment system, but there is no tool that everyone wants them to use.

The plan to set reference prices for minerals supplemented by tariffs has raised questions about whether the tariffs will apply to all products containing critical minerals.

For example, the United States has very limited lithium smelting capacity and currently has little demand for it, but laptops containing lithium batteries usually need to be imported.

Manufacturers have long believed that they prefer mineral products that are as cheap as possible.

Nathaniel Horadam, a former U.S. Department of Energy official, said, "One can try to set reference prices, but in the end, trade barriers cannot guarantee a price floor on the other side of the tariff wall, because many producers are competing." Horadam managed critical mineral loan programs during both the Biden and Trump administrations.

The OPEN initiative was launched at a time when private enterprises are striving to enhance transparency. Earlier this month, Reuters reported that the Chicago Mercantile Exchange plans to launch the world's first rare earth futures contract.

American miners have expressed support for reference price and tariff plans, which help them deal with dumping, but only if they can make a profit.

Oliver Friesen, Chief Executive Officer of Guardian Metal Resources, said, "We have a good understanding of the production cost of tungsten in the United States and hope that the reference price can be higher than this level." The company is developing two metal mines for hard steel in Nevada, USA.

Trump has ordered the renaming of the Department of Defense to the Department of War, but this requires congressional support.

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