The new “Project Vault” critical minerals stockpile launched by the White House and the U.S. Export-Import Bank is “absolutely” needed, but it represents just the first step of many to break China’s supply-chain dominance of minerals, including rare earths, over several years to come, industry analysts said.
The plans for the emergency national stockpile of certain critical minerals, announced Feb. 2, comes after the Trump administration already has taken the unusual step of making direct investments in several U.S. and Canadian critical minerals mining and processing companies over the past 10 months.
While supply-chain disruptions began showing up during the COVID-19 pandemic, the beginning of a tariff trade war with China last year triggered the “weaponization” of the dominance it had built up over several decades in critical minerals mining, processing, and magnet-manufacturing supply chains. Specific minerals, especially the 17 rare earths metals, are vital to manufacturing everything from military equipment to cars to high-powered computing and data centers, said Charles Boakye, energy sustainability and transition analyst at Jefferies.
“Is [Project Vault] needed? Absolutely,” Boakye told Fortune. “Will it be effective? I think we need to wait and see. The initial signs are definitely promising, but the bottleneck is not just the mining and sourcing; it’s also the processing. Even if the U.S. can stockpile many of these materials, how and who is going to do the processing depending on the end-use applications?”
Boakye called the stockpile a “first big step of many” needed to break China’s stranglehold over the next three to seven years, at least. “This is not a nationalization of U.S. minerals, but it comes very close to that. It’s state capitalism and it’s industrial policy.”
The project has been compared by some to the 50-year-old U.S. Strategic Petroleum Reserve, which currently holds 415 million barrels of crude oil in underground salt caverns in Texas and Louisiana. That reserve was started in response to the 1973 Arab oil embargo.
Commodities trading houses that have agreed to procure the minerals for the stockpiles include Hartree Partners, Mercuria, and Traxys.
The initial $12 billion effort for the U.S. Strategic Minerals Reserve includes a $10 billion direct Ex-Im Bank loan and $2 billion in private sector investment, President Trump said.
“For years, American businesses have risked running out of critical minerals during market disruptions,” Trump said in a brief video announcement. “Just as we have long had a Strategic Petroleum Reserve…we’re now creating this reserve for American industry, so we don’t have any problems.”
Long-term effort
As Ex-Im Chairman John Jovanovic added, “Project Vault is designed to support domestic manufacturers from supply shocks, support U.S. production and processing of critical raw materials, and strength America’s critical minerals sector.”
After China began to withhold certain magnets and minerals last year—in response to U.S. tariffs and bans on certain AI chips—a temporary one-year truce was agreed upon.
In the meantime, the U.S. government has acquired ownership stakes in two U.S. rare earths miners and specialty magnet manufacturers, MP Materials and USA Rare Earth.
As for the U.S. government’s other investments in critical minerals, the Trump administration has invested in two Canadian players, Lithium Americas and Trilogy Metals—both of which are developing U.S. projects—and in North Carolina–based magnets manufacturer Vulcan Elements. The government also has a deal with a critical minerals processor, Indiana-based ReElement Technologies, for the rights to buy stock.
Even if the U.S. and China eventually reach a longer-term deal on trade and critical minerals, Boakye said he doesn’t believe the U.S. will abandon its efforts.
“It’s not something that is going to immediately change that ability for China to weaponize its dominance,” Boakye said. This is part of a broader effort that requires more partnerships with Canada, the European Union, Australia, and other U.S. allies to develop mining and processing facilities worldwide, he said.
“We are in the midst of an economic war.”
