Trump Launches Strategic Minerals Reserve to Counter China's Supply Dominance
President Donald Trump has unveiled Project Vault, a comprehensive initiative to establish a strategic reserve of 50 critical minerals and 17 rare earth elements, marking a significant shift in US resource security policy.
The $12 billion programme, structured as a public-private partnership, combines $10 billion in financing from the US Export-Import Bank with $2 billion in private sector investment. Trump positioned the initiative as essential protection against potential supply disruptions from China, which maintains overwhelming control of global rare earth production.
Strategic Response to Resource Vulnerability
The initiative draws direct parallels to the Strategic Petroleum Reserve established in 1975 following the Arab oil embargo. Trump emphasised that the stockpile would ensure American businesses "are never harmed by any shortage" of these essential materials.
China currently controls approximately 70 per cent of global rare earth mining and 90 per cent of processing capacity. These elements are crucial for manufacturing everything from smartphones and electric vehicles to advanced military systems and renewable energy technologies.
"Just as we have long had a Strategic Petroleum Reserve, we're now creating this reserve for American industry," Trump stated, adding expectations that American taxpayers would profit from loan interest.
Regional Cooperation and Diplomatic Implications
The announcement coincides with a Critical Minerals Ministerial beginning Wednesday, bringing together G-7 nations and key partners including Australia, India, South Korea, Mexico, and New Zealand. External Affairs Minister S Jaishankar will represent India at these discussions.
European Union sources suggest successful negotiations could yield a joint statement representing a milestone shift towards coordinated allied efforts to reduce dependence on Chinese mineral supplies.
Australia features prominently in US strategy, with Trump having secured an $8.5 billion rare earth agreement with Canberra. This partnership reflects broader Indo-Pacific cooperation on critical resource security.
Market Response and Industry Impact
Financial markets responded positively to the announcement, with mining companies experiencing notable gains. MP Materials, which operates California's Mountain Pass mine, rose over 2 per cent, while USA Rare Earth and Critical Metals Corp. posted similar increases.
The Trump administration has systematically expanded its rare earth investments, including a recent $1.6 billion commitment to Rare Earths USA and a $400 million stake in MP Materials, making the government the company's largest shareholder.
Historical Context and Future Implications
The Strategic Petroleum Reserve, established after the 1973 oil crisis, has served as a crucial buffer during various global disruptions, from the Gulf War to Hurricane Katrina and the Ukraine conflict. Project Vault aims to provide similar security for critical minerals essential to modern technology and defence systems.
Analysts suggest China's previous restrictions on rare earth exports significantly impacted American industry, potentially influencing Trump's approach to broader US-China relations and trade negotiations.
The initiative represents a fundamental shift towards resource nationalism, positioning critical mineral security as essential to national defence and economic sovereignty in an increasingly multipolar world.