US Department of Defense Cancels $300 Million Lithium Procurement Bid, Critical Mineral Stockpiling Faces Challenges

According to Jinse Finance APP, the US Department of Defense has canceled the tender for the procurement of strategic reserve lithium, once again highlighting the challenges it faces in increasing the supply of critical minerals. According to a notice released by the Defense Logistics Agency (DLA) on Monday, the agency has withdrawn its plan to purchase nearly 36 million pounds (approximately 16,000 tonnes) of battery-grade lithium carbonate, with a contract value of up to $300 million. The DLA did not specify the reason for canceling the tender.

The procurement plan was originally issued on July 2, 2026, aiming to include lithium in the US National Defense Strategic Reserve through a five-year fixed-price contract, thereby reducing the supply risk of critical minerals. The original deadline for bids was July 17, which had been postponed twice thereafter.

To significantly reduce its dependence on China, the primary supplier country, critical minerals have become a political priority for the United States. Reportedly, in February this year, the Trump administration announced the launch of a critical minerals reserve plan, with a total scale of $12 billion. This plan aims to establish strategic reserves of lithium, nickel, rare earths, and other critical minerals to safeguard the supply chain security of the new energy, semiconductor, and defense industries, with more than a dozen companies such as General Motors and Boeing already participating.

So far this year, the price of lithium carbonate used in electric vehicles and energy storage systems in China has soared nearly 20%, and the price remains highly volatile. On Tuesday, the main lithium carbonate futures contract hit a high of 141,300 yuan. According to China Securities Construction Investment Corporation, as the peak season for demand arrives in the second half of the year, the supply gap for lithium carbonate is expected to gradually widen.

The DLA, which manages the national defense material reserves, canceled a tender for cobalt last year, a metal used in the battery and aerospace industries.

In pre-market US trading on Tuesday, lithium mining stocks strengthened, with Sigma Lithium (SGML.US) up more than 4% pre-market, Lithium Americas (LAC.US) gaining more than 2%, Albemarle (ALB.US) rising nearly 2%, and Sociedad Química y Minera de Chile (SQM.US) up nearly 1%.