Energy Fuels Rare Earth Processing, $725 M US Gov Backing, Zentek JV, and 30 Canadian Partnerships (2026)

Industry Adoption: Friend-Shoring Confronts US Policy and Execution Risks

The strategic imperative to “friend-shore” clean energy supply chains away from concentrated manufacturing hubs is solidifying in 2026, primarily focused on batteries and critical minerals. This realignment, however, is running into significant headwinds from policy instability and execution challenges, creating a fractured landscape where government-backed foundational projects advance while broader investment momentum slows, particularly in the United States.

• Between 2021 and 2024, Western industrial policies like the Inflation Reduction Act catalyzed a wave of announcements for relocated manufacturing. The period from 2025 to today marks a transition from announcements to execution, where companies are securing tangible government support to build resilient, non-Chinese supply chains.
• In 2026, this is demonstrated by companies like Energy Fuels, which secured up to $725 million in U.S. government backing to develop a domestic rare earth element processing facility. Similarly, Zentek formed a U.S. joint venture to establish a North American supply chain for its ultra-high-purity graphite, a critical mineral for both the U.S. and Canada.
• This strategic push is meeting significant friction. A potential shift in U.S. administration policy has been linked to a sharp decline in new clean energy manufacturing investments, which fell to $758.3 million in Q 1 2026. Reports from April 2026 indicate the administration is even paying some companies to cancel previously approved projects, injecting severe uncertainty into the market.
• The friend-shoring trend is not exclusively a Western phenomenon. Chinese manufacturers like Gotion High-Tech are establishing production in allied nations, such as a planned lithium carbonate plant in Finland, to serve local European markets and navigate potential trade barriers. This shows a multi-directional realignment of global manufacturing footprints. Meanwhile, companies like Shell Wind Energy and Chevron Natural Gas continue to adjust their massive energy portfolios in response to global dynamics.

Investment and Cancellations: US Policy Uncertainty Halts Manufacturing Investment Momentum

While targeted government backing for strategic critical minerals projects remains robust, broader private investment in U.S. clean energy manufacturing has plummeted in 2026. This slowdown is a direct consequence of policy uncertainty, creating a contrast between foundational, security-driven investments and a freeze in market-driven capacity expansion.

• The most significant signal of this slowdown is the collapse in new U.S. clean energy manufacturing investments, which dropped to $758.3 million in Q 1 2026. This follows years of growth spurred by federal incentives, indicating a sharp market reaction to perceived policy risk.
• Despite the broader downturn, strategic national security projects are still advancing with strong government support. On June 18, 2026, Energy Fuels announced it had secured up to $725 million in backing from the U.S. government to develop a rare earth element processing hub, a direct move to onshore a critical defense and energy supply chain.
• Project viability is now highly dependent on resilience to policy shifts. Battery startup Forge Nano reaffirmed its commitment to its delayed North Carolina plant in July 2026, highlighting the long-term strategic need for manufacturing capacity in allied nations, even amidst short-term turbulence.
• The changing policy environment is also leading to outright cancellations. An April 29, 2026 report noted that the Trump administration was paying companies to walk away from two previously awarded offshore wind projects, actively unwinding prior commitments. This creates a difficult environment for utilities like AEP Fuel Cell and manufacturers like EPC Power Energy Storage.

Table: US Clean Energy Manufacturing Investments & Cancellations (2026)

Partnership Data: Alliances Form to Build Integrated “China+1” Supply Chains

In 2026, strategic partnerships have become the primary mechanism for executing friend-shoring strategies. These collaborations are focused on building integrated, resilient supply chains for critical technologies, with North American and Indo-Pacific alliances leading the effort to create viable alternatives to Chinese dominance in minerals and manufacturing.

• Cross-border North American collaboration is central to securing critical minerals. In June 2026, Canadian firm Zentek formed a U.S. joint venture to commercialize its high-purity graphite, a mineral designated as critical by both countries, directly linking Canadian resources with U.S. industrial and defense markets.
• India is solidifying its position as a key “China+1” hub through technology partnerships. On July 16, 2026, Tata Electronics secured a partnership with Dutch firm ASML to acquire advanced technology for its planned semiconductor fabrication plant, a major step in building an indigenous high-tech manufacturing ecosystem. Such moves support the energy goals of companies like Indian Oil Corporation Hydrogen.
• Governments are actively brokering broad alliances to de-risk supply chains. In March 2026, Canada announced it had secured 30 new critical minerals partnerships, demonstrating a proactive, state-led strategy to diversify its trade relationships and unlock project capital.
• Multilateral financial institutions are also reinforcing this trend. The World Bank and Japan announced an expanded cooperation agreement on June 1, 2026, aimed at strengthening critical mineral supply chains and bolstering energy resilience for developing nations aligned with their goals. This is vital for new industrial processes like green steel, pursued by firms such as Infra Build EAF.

Table: Key Friend-Shoring Partnerships (2026)

Geography: North America and India Emerge as Primary “Friend-Shoring” Hubs

The geographic focus of clean energy manufacturing relocation in 2026 is coalescing around two major hubs: an integrated North American bloc for critical minerals and an expanding high-tech manufacturing base in India. This is happening while Chinese companies execute a parallel strategy, investing directly into allied markets like Europe and Mexico to preserve market access and circumvent trade barriers.

• North America is developing an integrated supply chain for critical minerals and batteries. Projects like Energy Fuels’ rare earth facility in the U.S. and Zentek’s U.S.-Canada graphite venture illustrate a strategy to link Canadian mineral resources with U.S. processing and manufacturing capacity.
• India has solidified its status as a primary “China+1” destination for advanced manufacturing. The Tata Electronics partnership with ASML is a landmark deal that signals India’s intent to move up the value chain from assembly to core technology fabrication, supported by significant government incentives.
• Europe is becoming a strategic investment destination for Chinese firms seeking to localize production. Gotion High-Tech’s battery materials plant in Finland is a clear example of this, designed to supply the European EV market from within and mitigate risks from EU trade policies. This regional focus also attracts data center developers like Clean Core AI & Data Center Energy 2026.
• Southeast Asia and Mexico are navigating a more complex position. A report from May 2026 identifies Mexico as a key target for Chinese EV manufacturers looking for a backdoor into the North American market. Southeast Asian nations remain caught in the “strategic supply chain dilemma” between the U.S. and China.

SWOT Analysis: Friend-Shoring Resilience vs. Policy and Cost Headwinds

The friend-shoring initiative offers a clear path toward greater supply chain resilience and national security, but its execution is fraught with risks. The primary threats are policy instability in the very nations promoting the strategy and the persistent economic advantages of the established manufacturing ecosystems it seeks to replace.

• The strategy’s core strength is the creation of secure, resilient supply chains for critical technologies, backed by strong government-to-government alliances.
• Its primary weakness is the high cost and complexity of replicating decades of optimized manufacturing, as well as the deep, lingering dependence of Western firms on Chinese sub-components.
• The main opportunity lies in developing new, ethical, and reliable sources of critical materials and fostering technological leadership in next-generation clean energy.
• The most significant threat is policy reversal in key host countries like the U.S., which can halt billions in investment and undermine the long-term credibility of the strategy.

Table: SWOT Analysis for Clean Energy Friend-Shoring (2026)

Scenario Modelling: 2027 Trajectory Hinges on US Policy Stability

The future of the clean energy friend-shoring movement in 2027 and beyond will be determined by the consistency of industrial policy in the United States. Policy stability will accelerate the realignment, while continued uncertainty will fragment efforts and push investment toward more predictable allied nations, potentially ceding momentum.

• If U.S. policy instability continues: Watch for a flight of capital and projects toward countries with more stable, long-term industrial strategies, such as Canada and India. Companies will prioritize policy predictability over direct access to the U.S. market, leading to more announcements like Tata’s in India and fewer in the U.S. The power needs of large tech companies like Google Fuel Cell and Meta Solar may drive them to seek international energy projects, such as those involving Google Nuclear partnerships abroad.
• If China accelerates FDI into allied markets: Watch for the U.S. and E.U. to tighten regulations around tariffs and subsidies, potentially including stricter “rules of origin” or scrutiny of ultimate beneficial ownership. The moves by Chinese firms into Mexico and Gotion High-Tech’s Finland plant are test cases that will determine the next phase of trade policy.
• If North American mineral projects prove successful: Watch for the model established by Energy Fuels and Zentek to be replicated for other critical materials like lithium and cobalt. Success would validate the government-backing model and likely unlock a new wave of public-private partnerships aimed at fully securing the regional supply chain by 2030.

The questions your competitors are already asking

This report covers one angle of the friend-shoring strategy for critical minerals. The questions that matter most depend on your work.

• US government funding rare earth processing
• New critical minerals projects in Canada
• US clean energy investment decline reasons
• Chinese battery companies building in Europe

This report does not answer these. Enki Brief Pro does.

Your question, your angle, your framework. SWOT, PESTL, scenario modelling. The same niche depth, built around the decision your work actually depends on.

Run your first brief in Enki Brief Pro