Trump administration plans $12bn critical minerals stockpile to offset China supply risk — initiative to create 60-day reserve of rare earths for electronics manufacturing

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‘Project Vault’ will create a 60-day reserve of key materials for civilian needs.

Mining operation
(Image credit: Getty Images / Bloomberg)

The Trump administration will soon launch a $12 billion critical minerals stockpile designed to insulate U.S. Manufacturing from supply disruptions tied to China’s dominance of mining and refining. According to sources cited by Bloomberg, the initiative, known as Project Vault, will provide a roughly 60-day emergency buffer for key minerals used across electronics, automotive, aerospace, and energy supply chains.

Procurement of the stockpile will primarily be financed through a $10 billion, 15-year loan from the U.S. Export-Import Bank, supplemented by around $1.67 billion in private capital. The bank is expected to vote later today on whether to authorize the 15-year loan, which is more than double the net-largest deal it has ever issued, while President Trump is scheduled to meet with General Motors CEO Mary Barra and mining magnate Robert Friedland.

Commodity traders Hartree Partners, Traxys North America, and Mercuria are understood to be managing procurement and inventory, while participation is open to manufacturers that are willing to commit to fixed-price purchase and repurchase agreements. According to a senior administration official, the project is already “oversubscribed because investors are attracted by a credit-worthy group of manufacturers.”

Although the U.S. Already has a national stockpile of minerals for the defense-industrial sector, it doesn’t have one for civilian needs. Gallium and germanium, for example, are critical inputs for semiconductors used in the likes of power electronics and RF components, while rare earth elements are found in the magnets that appear in everything from hard drives to industrial motors.

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Luke James
Luke James
Contributor
9 Comments Comment from the forums
  • Roland Of Gilead
    Surely $12bn is a drop in the ocean in terms of the market and high prices of rare earth minerals?

    Call me sceptical, I just don't see how this will make a difference, even as a fallback,
    Reply
  • TechieTwo
    CYA is important with the unstable world that we live in. Two months supply is better than no reserve supply.
    Reply
  • bit_user
    I agree with this.

    The article said:
    Based on what we know so far, Project Vault seems like it will function similarly to the existing U.S. Strategic Petroleum Reserve
    Yup. That's what I thought, too.
    Reply
  • Tanakoi
    Roland Of Gilead said:
    Surely $12bn is a drop in the ocean in terms of the market and high prices of rare earth minerals?

    Call me sceptical, I just don't see how this will make a difference, even as a fallback,
    The goal isn't to ensure you can still buy cheap iPhones during a potential CCP embargo, but that they can't significantly impact critical military and national infrastructure.
    Reply
  • bit_user
    Tanakoi said:
    The goal isn't to ensure you can still buy cheap iPhones during a potential CCP embargo, but that they can't significantly impact critical military and national infrastructure.
    Well, if it's truly like the Strategic Petroleum Reserve, then it actually can be used to soften price shocks from supply constraints. I don't know if it's exclusively for military supply chains, but either way it serves the purpose of slightly decreasing the leverage China has over the US.
    Reply
  • hotaru251
    ...does having the resources matter when thats not issue as much as the limited amount of stuff that can be made in a timeframe?
    Reply
  • Tanakoi
    bit_user said:
    Well, if it's truly like the Strategic Petroleum Reserve, then it actually can be used to soften price shocks from supply constraints.
    True, but in the case of oil it's done not to ease consumer pain but because if workers can't afford gas to commute, the economy shuts down. And if shippers can't afford diesel, our nation's cities begin to starve in 72 hours time. Of course it can be (and sometimes is) abused to lower prices for sheer political purposes.

    Hotaru251 said:
    ...does having the resources matter when thats not issue as much as the limited amount of stuff that can be made in a timeframe?
    The US has plenty of rare earth reserves. And while opening a mine normally takes many years, in a national emergency situation it can be done far faster.
    Reply
  • bit_user
    Tanakoi said:
    True, but in the case of oil it's done not to ease consumer pain
    It actually has been used to lower market prices for oil & gasoline, in the USA.
    Https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(United_States)#Petroleum_sales_-_Prior_to_2015
    Tanakoi said:
    Of course it can be (and sometimes is) abused to lower prices for sheer political purposes.
    You call it political purposes, but giving potential adversaries a way to weaken popular support for the US administration is also giving them leverage. So, I think there's not such a clear line between political vs. Strategic.

    I'd say that using it to lower fuel prices, at a time when they're already fairly low, would be an example of using it for nakedly political purposes.

    Tanakoi said:
    The US has plenty of rare earth reserves. And while opening a mine normally takes many years, in a national emergency situation it can be done far faster.
    The refining capacity is what China dominates most (90%, worldwide). That actually takes a long time to bring online.


    BTW, in announcement of this new reserve, it was mentioned that the U.S. Already has a stockpile of critical minerals for defense and industrial purposes. So, this new reserve is either primarily or expressly for civilian purposes.
    Reply
  • Tanakoi
    bit_user said:
    It actually has been used to lower market prices for oil & gasoline, in the USA.
    Sure; as I said, it's often abused. The fact remains its intended purpose is strategic: to avoid short-term disruptions that would dramatically harm the economy. The problem with attempting to use it for long-term price reductions has already been mentioned: it's not nearly large enough; using it for such risks having none available in a true emergency.

    Bit_user said:
    The refining capacity is what China dominates most (90%, worldwide). That actually takes a long time to bring online.
    Actually, no. China has built rare earth refineries in 18 months time. In the US, it takes ten years simply due to the permitting process and countless "environmental reviews".

    Bit_user said:
    BTW, in announcement of this new reserve, it was mentioned that the U.S. Already has a stockpile of critical minerals for defense and industrial purposes.
    That's the Defense National Stockpile: it's for national security use only, and is an order of magnitude smaller.
    Reply