The United States is decades behind China in the critical minerals race, and is not on track to catch up any time soon. To close the gap, the Trump administration has taken a heavy-handed approach, setting price floors and taking equity stakes in an effort to build a market in record time.
As part of its push for speed, the government has spotlighted the promise of circularity, through executive orders and federal grants targeting recycling and waste recovery.
The allure of “urban mining” — extracting critical minerals from what could be a massive above-ground deposit, sitting in junk drawers, scrap yards, and tailing piles — is self-evident. Analysts predict nearly 300 new mines or processing plants will be needed globally to meet surging demand by 2030, but opening a new mine in the U.S. takes an average of 29 years from discovery to production.
However, the reality is that it is incredibly difficult to turn trash into critical minerals treasure. Urban mining presents not only a logistics problem, but also comes with problems of physics, chemistry, and economics. In the past, when imports were more abundant, those challenges prevented scale. And even as demand soars, several of the sector’s highest-profile companies have scrambled to stay afloat in the last year.
The key shift underway, though, is the national security imperative, said Grayson Shor, a critical minerals circularity expert who until earlier this year led Amazon’s circular economy efforts.
Today, China produces nearly two-thirds of the 50 minerals the U.S. Geological Survey considers “critical,” and refines up to 90% of the world’s supply; that includes rare earths, which are critical for defense, electronics, and the data centers, but are expensive and environmentally tricky to mine. Beijing has weaponized that dominance via export restrictions, most notably the tightening of controls on rare earths and battery components.
“Reliance on one country or one region for material that goes into everything from consumer telecommunications products, to the AI industry that’s pulling up our economy this year, to military infrastructure and everything in between is concerning,” said Shor, who recently founded Buckstop, an AI-powered intelligence platform focused on measuring the value of recovering critical minerals. When it comes to critical minerals, the U.S. finds itself in a similar landscape to the one preceding the 1970s oil crisis, when an OPEC embargo led to major shortages, Shor added.
“I think we’re going to have our 1970’s oil moment for critical minerals sooner rather than later,” he said. That may be a tipping point on support for critical minerals circularity — but it doesn’t mean the sector is prepared for it.
The feedstock gap
Much of the conversation around urban mining domestically has focused on EV battery recycling. That industry, buoyed by the Inflation Reduction Act and loans from the Department of Energy, raced to scale capacity in anticipation that used batteries would soon be plentiful. Those potential inputs, however, largely still haven’t materialized, in part because EVs are lasting longer than predicted.
The mismatch between recycling capacity and available feedstock was central to Canadian battery recycler Li-Cycle’s bankruptcy earlier this year. The company faced a severe feedstock shortage, which prevented its Rochester factory from operating at full capacity, kept fixed costs high, and constrained revenue. And Redwood Materials, the battery recycling company founded by former Tesla CTO JB Straubel, shifted toward using second-life batteries for grid storage, including to power data centers.
“Acquiring feedstock is a common difficulty for urban mining startups, so we often focus on that during due diligence,” said Mollie Wilkinson, an investor at Orion Industrial Venture, the venture arm of metals and materials investment firm Orion Resource Partners. A startup might have developed a new chemical process to extract a specific material from circuit boards, for example, but if they can’t aggregate enough boards to run the plant 24/7, the economics start to collapse.
I think we’re going to have our 1970’s oil moment for critical minerals sooner rather than later.
The feedstock problem isn’t just about volume, though; it’s also a serious logistical challenge.
“It’s not like a mine, where all of the material you’re looking for is in one place,” explained Mike Biddle, an investor at Evok Innovations who spent decades in the recycling industry after founding MBA Polymers in 1992. “You have to create reverse supply chains to very distributed resources.” Sourcing feedstock from all over the country is expensive. Combined with lower purity levels, logistics costs can easily exceed the value of the material that’s recovered.
Evok hasn’t made any investments in end-of-life recycling, despite Biddle’s background in the circular economy, for precisely that reason. “No one has convinced me that they have a lockdown on current supply and simultaneously have a process that can economically compete with the way we harvest materials today,” he added.
On the flip side, urban mining faces fewer structural barriers than primary mining when it comes to things like discovery, permitting, and construction, Wilkinson said: “So while feedstock supply needs to be secured, and it may not be suitable for every commodity and cannot fill all demand, [urban mining] can act very quickly and potentially very economically to deliver needed new mineral supply.”
The challenge for companies hoping to take advantage of government need and investor interest, is proving that potential in practice.
The ‘unmaking’ problem
Even when feedstock is secured, extracting valuable materials from it remains brutally difficult. Manufacturing processes have been designed for speed and cost efficiencies, not for ease of recycling.
Most products, including batteries, are specifically engineered not to come apart, Biddle explained: “Mining ore is not easy, but I think that what [the sector] is finding is that the unmaking of batteries is more difficult.”
The process of undoing manufacturing also introduces another problem: High-value end users like battery manufacturers have strict purity requirements, but recycling processes tend to result in purity dilution.
“Unless you’ve got a process that ends with an extremely high purity…it’s difficult to get high value,” Biddle explained. It’s an inherent disadvantage of urban mining compared to primary mining, he added: Undoing what humans have engineered is often harder than undoing what nature created.
This is one of the key problems that startups are looking to address with new technology. Cyclic Materials, a Canadian startup focused on rare earths, is using a proprietary process to isolate magnets from the other components of an electric motor before that motor is shredded for steel recycling. In a traditional process, the magnets would stick to the scrap and be lost to the steel recycling stream, diluting their value.
The company is tackling the logistics challenge with a “hub and spokes” model. Small facilities close to urban centers handle initial intake and breakdown of end-of-life products, then send extracted rare earth magnets to central “hub” plants for processing into high-quality rare-earth oxides.
They identify the locations of their spoke facilities based on density of feedstock, explained co-founder and CEO Ahmad Ghahreman. In Arizona, for example, where Cyclic is building a commercial spoke plant, the company estimates there are more than 150,000 tons of end-of-life products that could serve as feedstock. The plant only needs 25,000 tons a year to run at scale, he added.
Cyclic currently has one “hub” plant up and running, and is in the process of building its second.
A periodic table problem
Perhaps the most foundational challenge to scaling urban mining for critical minerals is the fact that there’s no one-size-fits-all approach, explained Elizabeth Holley, an associate professor of mining engineering at the Colorado School of Mines.
“Depending on whose list you use, half the periodic table is listed as a critical mineral,” she explained. Some critical minerals can be combined into particular categories based on where they occur and the ease of co-producing them, but for the most part “you’re comparing apples and oranges and bananas and pineapples.”
There are six production pathways for critical minerals: imports, new mines, byproducts, reprocessing, recycling, and decreasing demand via efficiency and substitution. Urban mining is an umbrella term that includes recycling, waste reprocessing, and to some extent, byproduct recovery. Each critical mineral has its own “toolbox” of pathways that make the most sense, and that may or may not include any urban mining.
“We look at each one of these production pathways and we think about risk, time, cost, and abundance [for each mineral],” Holley said. She pointed to the example of recycling neodymium, a rare earth element used in magnets that the U.S. imports in large quantities from China. Recycling doesn’t come with geopolitical risk and is faster than opening a new mine. But there isn’t enough neodymium currently circulating in the U.S. waste stream to meet demand from EV motors and wind turbines. Urban mining strategies alone won’t solve the shortage, meaning that new mines or imports are mathematically necessary.
The current landscape — massive AI growth, tensions with China — makes this a particularly challenging time to scale urban mining approaches, despite the enthusiasm. Circular economies, including for critical minerals, don’t work particularly well when demand is actively growing, Holley added. “I think we have to address the demand growth, either through imports or new mining,” she said. “Where [urban mining] can really help is in being insurance against supply chain instability.”
For private investors, it’s the near-term value of that insurance policy that dictates where money flows. Materials with high value, and high-volumes of feedstock, like rare earths, tend to be more compelling, explained Wilkinson. This is a key distinction between urban mining and scrapping, which is already done at scale, but is unlikely to generate venture-scale returns:
“It’s more capital-efficient to extract higher-value materials from e-waste feedstocks than it is to extract copper, steel, or aluminum from scrap metal feedstocks.”
The Washington angle
Many in the urban mining sector are hoping the Trump administration’s focus on domestic supply chains will spur investment in urban mining infrastructure.
But these companies, and particularly startups, can’t hang their entire businesses on the zeal of the Trump administration. Ghahreman said Cyclic is already looking beyond North America as it scales.
“Some policies in Europe are really attractive to us,” Gahreman explained, pointing to the EU’s Critical Raw Materials Act, which mandates that at least a quarter of the region’s critical minerals consumption come from domestic recycling by 2030. “Our goal is to develop more projects in our pipeline and be aggressive in execution and implementation of those projects in new jurisdictions.”
The U.S. has been slower on the uptake with similar regulations, though has taken a similar approach in the past with materials like aluminum, tires, and lead-acid batteries.
Such mandates, said Balki Iyer, founder and CEO of Bridge Green Upcycle, could galvanize the urban mining sector. Whether they come from the Trump administration and stem from national security concerns, or from a future, more climate-aligned administration interested in the energy transition, Iyer added, the end result is the same.
Once the demand is there, “everything will fall into place,” he explained. “The technology innovators like us will jump in and provide the solution for technology and unit cost, and investors will come in and start chasing these deals.”
That’s already starting to happen, even in the last year: “We’re really on the precipice of the growth phase,” Iyer said. The challenges experienced by Li-Cycle and Redwood, he said, were in part due to timing.
“We’ve been working, and waiting for the industry to mature so that we can mature our own processes and technologies. You’ve got to be at the right place at the right time — you don’t want to be too early, you don’t want to be too late.”
