The U.S. Department of Defense cancels $300 million lithium procurement tender; challenges encountered in replenishing critical minerals.

The U.S. Department of Defense has canceled its bidding for strategic reserve lithium procurement, underscoring the challenges it faces in increasing the supply of critical minerals. According to an announcement from the Defense Logistics Agency (DLA) on Monday, the agency has withdrawn its plan to procure nearly 36 million pounds (about 16,000 tons) of battery-grade lithium carbonate, with a maximum contract value of $300 million. The DLA did not specify the reason for canceling the bid. The procurement plan was initially announced on July 2, 2026, with the aim of incorporating lithium into the U.S. national defense strategic reserve through a five-year fixed-price contract to reduce the risks associated with the supply of critical minerals. The bidding was originally set to close on July 17 but was postponed twice thereafter. To significantly reduce dependence on major supplier China, critical minerals have become a political priority for the U.S. It was reported that the Trump administration announced the launch of a critical mineral reserve program with a total scale of $12 billion earlier this year. The program aims to establish strategic reserves of critical minerals such as lithium, nickel, and rare earths to ensure the security of supply chains for new energy, chips, and the defense industry, with over a dozen companies including General Motors and Boeing participating. So far this year, lithium carbonate prices for electric vehicles and energy storage systems in China have surged nearly 20%, and price volatility remains high. On Tuesday, lithium carbonate futures reached a peak of 141,300 yuan. China Securities Co., Ltd. believes that as the demand peak for the second half of the year approaches, the gap in lithium carbonate supply is expected to gradually widen. The DLA, which manages the defense material reserves, canceled a procurement bid for cobalt last year, a metal used in industries such as batteries and aerospace. On Tuesday, pre-market trading saw strength in the lithium mining sector, with Sigma Lithium (SGML.US) rising over 4%, Lithium Americas (LAC.US) up over 2%, Albemarle Corporation (ALB.US) nearing a 2% increase, and Sociedad Quimica y Minera de Chile S.A. Sponsored ADR Pfd Series B (SQM.US) climbing nearly 1%.