The United States President Trump is planning to launch a strategic critical mineral reserve program, allocating $12 billion as an initial funding. This move comes as the United States seeks to reduce its dependence on China in rare earth and other critical minerals. The reserve program will assist American manufacturers in dealing with supply disruptions.
According to Bloomberg, the “Project Vault” will gather $1.67 billion in private capital and a $10 billion loan from the Export-Import Bank of the United States to procure and store minerals for automakers, tech companies, and other manufacturers.
On Monday, the Board of Directors of the Export-Import Bank of the United States plans to vote on approving this record-breaking 15-year loan. The scale of this loan will be more than twice the size of the bank’s second-largest transaction in history.
This will be the first such reserve project in the private sector in the United States. Currently, the U.S. has a national strategic mineral reserve to meet the needs of the defense industry, but a civilian reserve has not been established yet.
Several U.S. government officials have revealed details of the “Project Vault” to Bloomberg. The project is similar to the U.S.’s existing national strategic petroleum reserve, but the reserve will no longer focus on crude oil but resources like gallium, cobalt, widely used in products such as iPhones, batteries, and jet engines. The reserve is expected to cover rare earths and critical minerals, as well as other elements that are strategically important and experience significant price volatility.
This new initiative will provide participating manufacturers with a way to mitigate the risks of price fluctuations in critical raw materials without maintaining their own inventory.
Currently, over a dozen companies are participating in the project, including General Motors, Stellantis NV, Boeing, Corning Inc., GE Vernova, and Google under Alphabet. Three major commodity trading firms have signed contracts to procure raw materials to fill the inventory, including Hartree Partners LP, Traxys North America LLC, and Mercuria Energy Group Ltd.
This marks a significant commitment by the Trump administration to accumulate minerals deemed crucial to the industrial economy. It also highlights efforts by the Trump administration to gradually reduce its reliance on China in the U.S. supply chain. China currently dominates as the leading supplier and processor of global critical minerals, controlling 70% of rare earth mining and 90% of rare earth processing.
Last year, the Chinese Communist Party tightened export controls on some minerals, forcing some U.S. manufacturers to reduce production. This action by China heightened the sense of urgency for the Trump administration to take measures to mitigate risks in the critical mineral supply chain.
The U.S. took rare steps last year by directly investing in domestic mining companies to promote the production and processing of rare earths domestically. The U.S. government has signed cooperation agreements on critical minerals issues with Australia, Japan, Malaysia, and other countries. At a summit of dozens of countries to be held in Washington on Wednesday, the U.S. government will urge more countries to reach such agreements.
U.S. lawmakers have also proposed the idea of establishing a strategic mineral reserve. On January 15, bipartisan lawmakers in both houses of Congress introduced bills to establish a $25 billion strategic resilience reserve to support domestic supply chains of rare earth and other critical minerals, stabilize market prices, and encourage domestic mining and refining in response to China’s economic threats.
The chief Democratic senator of the Senate Foreign Relations Committee, Jeanne Shaheen, who co-sponsored the bill, stated that critical minerals have become a “vital bottleneck of the global economy” and a huge bargaining chip for Communist China, making the U.S. vulnerable to economic threats. The bill aims to protect the U.S. from foreign threats.
Co-sponsoring the bill, Republican Senator Todd Young said that for years, China has leveraged its dominance in critical minerals to manipulate global markets and supply chains. The bill aims to counter China’s ongoing threatening behavior, ensuring that the U.S. has a secure and reliable mineral supply to support its defense system and high-tech industry.