US DLA seeks to buy $300 million of lithium for strategic reserve

The Pentagon is entering the lithium market directly, seeking bids for as much as $300 million of battery-grade lithium carbonate over five years as it builds a strategic stockpile of critical minerals.

The US Defense Logistics Agency on July 2 issued a tender for about 36 million pounds (16,000 tonnes) of battery-grade lithium carbonate, with bids due July 17, according to a government solicitation. The contract carries a spending floor of $1 million and a ceiling of $300 million, with suppliers asked to submit fixed-price quotes for the five-year term.

"This procurement is part of a broader effort to secure supply chains for materials essential to national defense," the DLA said in the solicitation. The agency had issued a request for information on critical minerals stockpiling in March, signaling the government's intent to build direct military-grade reserves of lithium and other strategic materials.

Lithium carbonate prices have risen more than one-third this year, supported by growing demand from the electric-vehicle and energy-storage sectors and supply uncertainty across major producing regions. The DLA's tender adds a new government buyer to the market, potentially tightening physical supply further.

The lithium tender is one piece of a wider US government push to reduce dependence on China, which dominates global processing of lithium, rare earths, graphite, cobalt and gallium. Australia, the world's largest lithium producer, exports 95 percent of its lithium to China, according to a June 2026 report by the United States Studies Centre, creating a vulnerability the Pentagon is seeking to address.

Project Vault and the Strategic Reserve Build

The White House earlier this year launched Project Vault, a $12 billion public-private partnership backed by the Export-Import Bank of the United States to establish a strategic reserve of 60 essential minerals. The DLA's lithium tender operates alongside that initiative, with the agency managing the National Defense Stockpile that directly supports military requirements.

The US Army has also signed agreements to build critical minerals processing facilities at military bases across the country, part of a broader effort to create domestic processing capacity. US government investment in rare earth projects reached $7.6 billion from January 2025 through June 2026, a 321 percent increase from the prior four-year period, according to the Center for Strategic and International Studies.

Market Implications

For lithium producers, the DLA contract represents a guaranteed offtake buyer at a time when price volatility has made project financing difficult. The US government has used similar long-term offtake agreements to support domestic rare earth production, including its deal with MP Materials for rare earth processing at Mountain Pass, California.

The Quad — comprising the US, Australia, Japan and India — committed in May 2026 to mobilize up to $20 billion in government and private capital toward critical minerals projects. The DLA's lithium tender is the first direct US government procurement of the battery metal for strategic stockpiles, signaling that Washington is moving from policy frameworks to physical purchases.

This article is for informational purposes only and does not constitute investment advice.