Key Takeaways
President Trump announced a project to develop a critical and rare-earth minerals reserve, called “Project Vault,” to reduce reliance on Chinese rare-earth minerals.
The reserve will be “for civilian use in times of emergency,” buying and storing minerals for American manufacturers, as the United States currently has a stockpile of minerals for defense purposes.
The stockpile, a concept similar to the Strategic Petroleum Reserve, would be financed with about $2 billion in private funds and a $10 billion loan from the U.S. Export-Import Bank.
In 2024, the United States was entirely reliant on imports for 12 critical minerals, and imported 50% or more of 29 others.
Critical minerals include rare earths, cobalt, graphite, silicon, copper, nickel, titanium, and lithium, which are critical to the supply chains of many modern products, such as electric vehicle batteries, semiconductors, and smartphones.
President Trump is launching a $12 billion stockpile of critical and rare-earth minerals, called “Project Vault,” to reduce reliance on Chinese rare earths and curb China’s leverage in trade talks. President Trump indicated the reserve will be “for civilian use in times of emergency,” buying and storing minerals for American manufacturers, as the United States currently has a stockpile of minerals for defense purposes. The stockpile, a concept similar to the Strategic Petroleum Reserve, would be financed with about $2 billion in private funds and a $10 billion loan from the U.S. Export-Import Bank. CBS News reports that, in 2024, the United States was entirely reliant on imports for 12 critical minerals, and imported 50% or more of 29 others. Critical minerals include rare earths, cobalt, graphite, silicon, copper, nickel, titanium, and lithium, which are critical to the supply chains of many modern products, such as electric vehicle batteries, semiconductors, and smartphones.
The minerals kept in the reserve would help to shield the manufacturers of vehicles, electronics, and other goods from supply chain disruptions, ensuring they have reliable access even during periods of market volatility or geopolitical challenges. During trade talks last year following President Trump’s tariffs, China restricted exports of rare earths, which are needed for jet engines, radar systems, electric vehicles, laptops, and phones, prompting some U.S. manufacturers to reduce output. China controls about 70% of the world’s rare earth mining and 90% of global rare earths processing.
According to GlobalData, companies using Project Vault will need to commit to purchasing materials ahead of any price shock at agreed-upon prices and pay upfront fees for preferred access. Project Vault will identify and store the minerals and maintain the inventory. Commodities trading firms Hartree Partners, Traxys North America, and Mercuria Energy Group are tasked with procuring the minerals. Manufacturers can draw minerals against their allotment from the reserve when needed, with the obligation to replenish the stockpile afterwards. A key aspect of the venture is stabilizing market volatility by ensuring manufacturers repurchase materials at their original price. A number of companies (e.g., General Motors, Stellantis, Boeing, Corning, GE Verona, and Google) are involved in Project Vault. The project’s detailed structure is still being finalized.
The government-backed loan funding the reserve will cover a period of 15 years. The Export-Import Bank’s board voted to approve the loan, which would be its largest ever. The Trump administration has also sought to enhance domestic mineral production and processing through investments and international alliances with countries like Australia, Japan, and Malaysia.
Interior Secretary Doug Burgum said 11 additional countries would be announced for the initiative later this week.
U.S. Investments in Critical Minerals
According to Al Jazeera, in 2025, the Trump administration acquired equity stakes in a number of companies by converting federal grants into ownership positions. The United States has a 10% percent stake in USA Rare Earth, which plans to build rare earth element and magnet production facilities in the United States, with commercial production beginning in 2028. The project is funded by $1.6 billion from the CHIPS Act, passed during Biden’s presidency.
The U.S. government also acquired about a 10% stake, valued at around $1.9 billion, in Korea Zinc to help fund a $7.4 billion smelter in Tennessee through a joint venture with the U.S. government and U.S.-based strategic investors. The venture will operate a mining complex anchored by two mines and the only operational zinc smelter in the United States. Construction is to begin this year, with commercial operations expected to start in 2029.
In October, the U.S. government announced a $35.6 million investment to acquire a 10% stake in Canadian-based Trilogy Metals to support the Upper Kobuk Mineral Projects in Alaska. The investment supports the development of critical minerals, including copper, zinc, gold, and silver, in Alaska’s Ambler mining district in the northwest. President Biden slowed the development of the Ambler mining district by refusing to permit a right-of-way on federal land necessary to reach the mining area.
Also in October, the United States announced a 5% stake in Lithium Americas as part of a joint venture with General Motors to fund operations at the Thacker Pass lithium mine in Nevada. The project will supply lithium for electric vehicles.
The Associated Press reports that the Trump administration and private investors are partnering with Vulcan Elements and ReElement Technologies in a $1.4 billion deal. Vulcan Elements manufactures rare earth magnets, while ReElement processes rare earth mineral ores and recycles old batteries and other products made with rare earths.
In July, the White House announced a 15% investment in MP Materials, which operates the only currently active rare earth mine in the United States, located in California. The largest federal stakeholder in the investment is the Department of War (Defense), which committed $400 million.
The United States is also reportedly exploring an 8% share in Critical Minerals for a stake in the Tranbreez rare earths deposit in Greenland.
Analysis
Project Vault continues the trend of the Trump administration taking a heavy hand in providing funding for and acquiring ownership of critical minerals projects, basing this involvement on a theory of American vulnerability to supply disruptions from China. Although the adversary and resource are different, this motivation mirrors the creation of the Strategic Petroleum Reserve (SPR) after the 1973-74 oil embargo by the Arab members of OPEC.
The creation of this type of reserve sounds good in theory as a buffer against aggression from adversaries, but it suffers from the same problem as any government-driven program as its use is susceptible to political pressure rather than market forces. The administration would be wise to focus on eliminating government-imposed obstacles to the further development of our domestic mining industries. As former IER Economist Robert P. Murphy explains regarding the SPR, “just as we don’t ask the federal government to build cars or grow food, there is also no theoretical reason that it should be in charge of emergency stockpiles of oil. … The advantage of leaving such activity to the private sector, however, is that both theory and history suggest markets are much better at allocating resources—guided by profits and losses—than government officials.”
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