President Donald Trump‘s new critical minerals stockpile is aimed at safeguarding the U.S. supply chain from market disruptions, furthering the administration’s push to bolster domestic supply chains and reduce reliance on China.
China controls the global supply of critical minerals and has used it as leverage against the United States and other countries by imposing restrictions on exports of rare-earth minerals needed for build applications in the energy and defense sectors.
As part of a broad effort to address supply chain vulnerabilities, the White House last week announced “Project Vault,” a new critical mineral stockpile. Here’s what to know about it.
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What is the stockpile?
The purpose of Project Vault is to ensure there is uninterrupted access to critical minerals for industry during market disruptions and to reduce reliance on foreign supply chains.
The stockpile is similar to the U.S.’s existing crude oil stockpile, known as the Strategic Petroleum Reserve, which is considered the largest supply of emergency crude oil.
But rather than storing crude, the Project Vault stockpile would store minerals deemed “critical” by the Department of the Interior’s U.S. Geological Survey. The department has listed 60 minerals as critical, including lithium, boron, copper, lead, and uranium.
Dan McGroarty, a critical mineral consultant and member of the Graphite One advisory board, told the Washington Examiner that Project Vault underscores the need for metals and minerals not only for military use but also for advanced commercial technologies, data centers, artificial intelligence, and more.
The Department of Defense currently has the National Defense Stockpile, which reserves critical minerals and materials to reduce reliance on foreign sources for national security.
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But, unlike the National Defense Stockpile, Project Vault would support industry, rather than the military, as it creates a public-private partnership. The project has brought more than a dozen major tech and manufacturing firms to purchase rare earths and minerals to fill the reserve, including General Motors, Stellantis, Boeing, GE Vernova, and Google. It is part of an effort to stabilize and mitigate prices to the supply chain during geopolitical disruptions.
The minerals will be sourced both at home and abroad. The minerals will also be stored in a network of warehouse facilities in the country.
Still, McGroarty noted that operating the stockpile will be a “big challenge,” as participants will need to identify which materials are critical and at what grade and volume.
“If the vault is supposed to face and serve private companies and innovators. It should involve them in the conceptual phase that we’re going to enter now … so that they create a system and an inventory that is actually what the private sector entrepreneurs, innovators will actually need,” McGroarty said.
Who is funding the stockpile?
The U.S. Export-Import Bank, which authorized the program, provided a $10 billion loan and nearly $2 billion in private capital to purchase and store critical minerals.
Manufacturers participating in the program will make long-term commitments and pay a fee to access those minerals during times of maker disruptions.
Eric Robinson, special counsel at Baker Botts, said the stockpile could offer the mineral industry a price guarantee for commercial offtake.
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Stockpile beneficeries
Trump has noted that the stockpile would benefit taxpayers because it would generate profit from interest on the loan used to start the program.
The stockpile could benefit multiple groups, including taxpayers, Robinson of Baker Botts said. Since the financing is a loan from Ex-Im, he said, taxpayers should earn a return through interest payments.
He added that companies receiving the loan would face lower borrowing costs, allowing them to build critical minerals stockpiles more affordably. Robinson said suppliers seeking commercial offtake agreements would also benefit, as more industry participants would have financial flexibility to make purchases.
Anthony Huston, CEO of Graphite One, a mining company in Alaska, told the Washington Examiner that the benefit of Ex-Im offering nearly $12 billion in stockpile financing is essential for smaller companies that can’t afford to ride out market disruptions.
“It’s a very impressive combination of a lot of time getting put into this by some very smart people that are looking at this as a long-term solution to a problem that’s been occurring over the last 25 years,” Huston said.
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Market distortions
The stockpile is meant to ensure industries have access to minerals during market volatility, but it could inadvertently distort markets if not managed properly.
McGroarty said there will need to be careful thought given how they sell minerals 10 or 15 years later to ensure it doesn’t distort the markets. He noted that the National Defense Stockpile sells materials that are no longer needed and receives funds to finance materials that are more in demand
“The vault will one day start to dispose of materials that it has bought, and that’s going to have to be done very carefully or that could upend [the] market,” McGroarty said. “There are ways to do it well. And there are ways to do it without the fine grain.”
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Robinson noted that the stockpile is “absolutely” designed to cause market distortions, adding that “all of this federal lending causes market distortions.”
“Everything we’re seeing around this kind of programmatic is a deliberate market distortion. But it’s deliberate market distortion that’s supposed to be favorable for the American taxpayer, for the companies who are operating, and ultimately for the national security establishment,” Robison said.
