WASHINGTON (AP) — The Trump administration plans to deploy nearly $12 billion to create a strategic reserve of rare earth elements, a stockpile that could counter China's ability to use its dominance of these hard to process metals as leverage in trade talks.
President Donald Trump on Monday announced the start of “Project Vault,” which would initially be funded by a $10 billion loan from the U.S. Export-Import Bank and nearly $1.67 billion in private capital. The minerals kept in the reserve would help to shield the manufacturers of autos, electronics and other goods from any supply chain disruptions.
During trade talks last year spurred by Trump's tariffs, the Chinese government restricted the exporting of rare earths that are needed for jet engines, radar systems, electric vehicles, laptops and phones.
“We don’t want to ever go through what we went through a year ago,” Trump said in an apparent reference to the showdown with China, adding that, ultimately, “it did work out.” The president said he expects the government to make a profit from the loan being used to start the reserve.
China represents about 70% of the world’s rare earths mining and 90% of global rare earths processing. That gave it a chokehold on the sector that has caused the U.S. to nurture alternative sources of the elements, creating a stockpile similar to the national reserve for petroleum.
The strategic reserve is expected to be the highlight of a ministerial meeting on critical minerals that Secretary of State Marco Rubio will host at the State Department on Wednesday.
Vice President JD Vance plans to deliver a keynote address at the meeting, which officials from several dozen European, African and Asian nations plan to attend. The meeting is also expected to include the signing of several bilateral agreements to improve and coordinate supply chain logistics.
The State Department said in its statement announcing the meeting that the gathering “will create momentum for collaboration” among the participants to secure access to rare earths.
The government-backed loan funding the reserve would be for a period of 15 years. The U.S. government has previously taken stakes in the rare earths miner MP Materials, as well as providing financial backing to the companies Vulcan Elements and USA Rare Earth.
Bloomberg News was the first to report the creation of the rare earths strategic reserve.
Trump announced the reserve with General Motors CEO Mary Barra and mining industry billionaire Robert Friedland in the Oval Office, along with other members of his administration and congressional leaders.