Trump administration presses efforts to ensure supply of critical minerals outside of China
WASHINGTON– The Trump administration is expected to unveil its biggest plan yet to rebuild supply chains for critical minerals needed for everything from airplane engines to smartphones, likely through purchasing deals with partners in addition to creating a $12 billion U.S. strategic reserve to help counter China’s dominance.
Vice President JD Vance will deliver remarks Wednesday at a meeting hosted by Secretary of State Marco Rubio with officials from several dozen European, Asian and African countries. The United States is expected to sign agreements on supply chain logistics, although details have not yet been revealed. Rubio met with the foreign ministers of South Korea and India on Tuesday to discuss the mining and processing of critical minerals.
The meeting and expected agreements will take place just two days after President Donald Trump announced “Project Vault,” a stockpile of critical minerals that will be financed by a $10 billion loan from the U.S. Export-Import Bank and nearly $1.67 billion in private capital.
The Trump administration is taking such bold action after China, which controls 70% of global rare earth mining and 90% of processing, choked off the flow of the elements in response to Trump’s tariff war. The two superpowers are on a year-long truce after Trump and Chinese President Xi Jinping met in October and agreed to lift high tariffs and tighten restrictions on rare earths.
But China’s limits remain stricter than they were before Trump came to power.
“We never want to relive what we went through a year ago,” Trump said Monday when announcing Project Vault.
Other countries could join the Trump administration in buying critical minerals and taking other steps to spur industry development as the trade war has exposed how vulnerable Western countries are to China, said Pini Althaus, who founded Oklahoma rare earth mining company USA Rare Earth in 2019.
“They’re looking at creating a sort of buyers’ club, if you will,” said Althaus, who now works on developing new mines in Kazakhstan and Uzbekistan as CEO of Cove Capital. “The major producers and major consumers of critical minerals will sort of come together and work on pricing structures, price floors and other things. »
Last week, the government also made its fourth direct investment in a U.S. critical minerals producer by granting $1.6 billion to USA Rare Earth in exchange for stock and a reimbursement agreement.
These days, seeking government funding is like meeting private equity investors, as officials scrutinize companies to make sure anyone they invest in can deliver on its promises, Althaus said. And the government is requiring conditions designed to generate a return for taxpayers as loans are repaid and stock prices rise, he said.
Meanwhile, the board of directors of the U.S. Export-Import Bank this week approved a $10 billion loan – the largest in its history – to help finance the creation of the U.S. reserve of strategic critical minerals. It is responsible for ensuring access to critical minerals and related products for manufacturers including battery maker Clarios, energy equipment maker GE Vernova, digital storage company Western Digital and aerospace giant Boeing, according to the policy bank.
The bank’s chairman and president, John Jovanovic, told CNBC that the project creates a public-private partnership formula that “is uniquely tailored and puts America’s best asset forward.”
“This creates a scenario where there are no free riders. Everyone pitches in to solve this huge problem,” he said.
Manufacturers, who benefit most from the reserve, are making a long-term financial commitment, Jovanovic said, while the government loan stimulates private investment.
The stockpiling strategy could help spark a “more organic” pricing model that excludes China, which has used its dominance to flood the market with cheaper products to oust rivals, said Wade Senti, president of U.S. permanent magnet company AML.
The Trump administration has also injected public money directly into the sector. The Pentagon has shelled out nearly $5 billion over the past year to secure its access to materials after the trade war laid bare how much the United States is indebted to China.
A bipartisan group of lawmakers last month proposed creating a new $2.5 billion agency to boost production of rare earths and other critical minerals. Lawmakers applauded the actions taken by the Trump administration.
“This is a clear sign that there is bipartisan support for ensuring a robust domestic supply of critical minerals, which both reduces our dependence on China and stabilizes the market,” Senators Jeanne Shaheen, D-N.H., and Todd Young, R-Ind., said in a joint statement Tuesday.
Building a stockpile will help U.S. companies weather future rare earth supply disruptions, but it will likely be a long-term effort because the materials are still scarce now with Chinese restrictions, said David Abraham, a rare earth expert who has followed the industry for decades and wrote the book “The Elements of Power.”
The Trump administration has focused on boosting production of critical minerals, but Abraham said it was also important to encourage the development of a manufacturing industry that would use them. He noted that Trump’s decisions to cut incentives for electric vehicles and wind turbines have weakened demand for these items in America.
