Trump aims to get crucial minerals from outside China
The Trump administration is poised to reveal its most ambitious initiative to date aimed at reconstructing supply chains for essential minerals required for a wide array of products, from jet engines to smartphones. This effort is anticipated to include purchase agreements with partners, in addition to establishing a $12 billion US strategic reserve to mitigate China’s influence. Vice President JD Vance will deliver a keynote address on Wednesday at a meeting hosted by Secretary of State Marco Rubio, which will include officials from numerous European, Asian, and African nations. The US is anticipated to finalize agreements regarding supply chain logistics, although specifics remain undisclosed. On Tuesday, Rubio engaged in discussions with the foreign ministers of South Korea and India regarding the mining and processing of critical minerals. The meeting and anticipated agreements will take place merely two days following President Donald Trump’s announcement of “Project Vault,” which involves a stockpile of critical minerals to be financed through a $10 billion loan from the US Export and Import Bank, alongside nearly $1.67 billion in private capital. The Trump administration is taking decisive actions following China’s control over 70% of the world’s rare earths mining and 90% of the processing, which restricted the supply of these elements in reaction to Trump’s tariff war. The two superpowers are currently engaged in a one-year truce following a meeting between Trump and Chinese President Xi Jinping in October, where they reached an agreement to reduce high tariffs and intensify restrictions on rare earth materials.
However, China’s restrictions are still more stringent than they were prior to Trump’s administration. “We don’t want to ever go through what we went through a year ago,” Trump said on Monday when announcing Project Vault. Challenging China’s supremacy in essential minerals Other countries may align with the Trump administration in acquiring essential minerals and implementing additional measures to promote industry growth, as the trade war has exposed the vulnerabilities of Western nations to China, stated Pini Althaus. “They’re looking at setting up sort of a buyers’ club, if you will,” said Althaus. “The key producers and key consumers of critical minerals will come together to collaborate on pricing structures, floor pricing, and other related matters.” Last week, the government executed its fourth direct investment in an American critical minerals producer, extending $1.6 billion to USA Rare Earth in return for stock and a repayment agreement. “Seeking government funding these days is like meeting with private equity investors because officials are scrutinizing companies to ensure anyone they invest in can deliver,” Althaus said. He stated that the government is insisting on conditions aimed at ensuring a return for taxpayers as loans are repaid and stock prices rise.
Meanwhile, the board of the US Export-Import Bank this week approved the $10 billion loan – the largest in its history – to assist in financing the establishment of the US Strategic Critical Minerals Reserve. The policy bank states that it is responsible for ensuring access to critical minerals and related products for manufacturers such as battery maker Clarios, energy equipment manufacturer GE Vernova, digital storage company Western Digital, and aerospace giant Boeing. Bank President and Chairman John Jovanovic stated that the project establishes a public-private partnership model that “is uniquely suited and puts America’s best foot forward. What it does is it creates a scenario where there are no free riders. Everybody pitches in to solve this huge problem,” he said. According to Jovanovic, manufacturers that gain the most from the reserve are making a long-term financial commitment, while the government loan encourages private investments. The stockpile strategy may help ignite a “more organic” pricing model that excludes China, which has leveraged its dominance to inundate the market with lower-priced products to eliminate competitors, stated Wade Senti, president of the US permanent magnet company AML. The Trump administration has also allocated public funds directly into the sector. The Pentagon has expended nearly $5 billion over the past year to secure access to essential materials, revealing the extent to which the US is reliant on China amid the trade war. A bipartisan group of lawmakers proposed last month the establishment of a new agency with a budget of $2.5 billion aimed at boosting the production of rare earths and other critical minerals. The lawmakers expressed their approval of the actions taken by the Trump administration. “It’s a clear sign that there is bipartisan support for securing a robust domestic supply of critical minerals that both reduces our reliance on China and stabilizes the market,” Sens. Jeanne Shaheen said in a joint statement Tuesday.
Establishing a stockpile will assist American companies in navigating potential future disruptions in rare earth supply. However, this endeavor is expected to be a long-term process, as the materials remain limited due to China’s restrictions, noted David Abraham, a rare earths expert with decades of industry experience and author of “The Elements of Power.” The Trump administration has concentrated on revitalizing critical minerals production; however, Abraham emphasized the significance of fostering the development of manufacturing that will utilize these resources. He remarked that Trump’s choices to eliminate incentives for electric vehicles and wind turbines have diminished demand for these components in America.
