Administration to Launch Critical Minerals “Stockpile”
The Trump administration announced it will launch a critical minerals stockpile to reduce U.S. dependence on China for rare earths and other metals (Bloomberg, subscription).
What’s going on: “The venture—dubbed Project Vault—is set to marry $1.67 billion in private capital with a $10 billion loan from the U.S. Export-Import Bank to procure and store the minerals for automakers, tech firms and other manufacturers.”
- The plan aims to ensure ample domestic supplies of cobalt, lithium, gallium and other materials crucial to the manufacture of smartphones, batteries and jet engines.
- The loan’s term is a record-setting 15 years, more than twice as long as the next-longest deal ever done by the bank.
How it will work: “Under the arrangement, companies that make an initial commitment to purchase materials at a specified inventory price later—and pay some up-front fees—will be able to present Project Vault with a shopping list of preferred materials they need.”
- “The project, in turn, will seek to procure and store the materials, with the manufacturers charged a carrying cost for the expenses associated with interest on the loan and holding the elements.”
What it’s intended to do: “The new venture will offer participating manufacturers a way to insulate their businesses from swings in prices for key materials without having to maintain their own stockpiles.”
Who’s in: “The project has participation from more than a dozen companies so far, including General Motors Co., Stellantis NV, Boeing Co., Corning Inc., GE Vernova Inc. and Alphabet Inc.’s Google.”
- In addition, three commodities trading houses signed on to handle raw material purchases to supply the stockpile.
The backdrop: China has tightened export controls of its critical minerals multiple times in recent years, hitting manufacturing in the U.S. and causing reduced production.
- This announcement follows the president’s directive last month for the Department of Commerce and the U.S. Trade Representative to negotiate trade agreements to secure greater access to critical minerals and their derivative products.
- The State Department is also hosting an inaugural Critical Minerals Ministerial today with delegations from more than 50 countries.
The NAM says: The NAM is supportive of a U.S. strategic reserve of certain minerals for both commercial and defense purposes. In comments to the administration in May, NAM Vice President of International Policy Andrea Durkin noted that a critical minerals reserve can mitigate against geopolitical risks and market volatility, act as an important demand signal for domestic industry and provide a hedge against China’s global price-setting power.
- “The NAM believes it is vital for global economic leadership and for U.S. national security to safeguard stable and diversified supply chains of critical minerals. Policymakers should pursue permitting reforms and strategic incentives that will produce durable, long-term manufacturing outcomes,” said Durkin and NAM Vice President of Domestic Policy Chris Phalen.