U.S. launches strategic stockpiling of rare earths to counter China’s supply chain dominance

New York, The Financial News — Lee Byung-chulThe Donald Trump administration is investing about $12 billion to build a strategic stockpile base for rare earth elements (REE). Because China has used its dominance over the REE supply chain as leverage in trade talks, the move is seen as an industrial security measure to keep that power in check.
According to The Associated Press (AP), Consumer News and Business Channel (CNBC) and other outlets, the White House on the 2nd (local time) officially confirmed the launch of "Project Vault." Initial funding will come from a $10 billion loan from the Export-Import Bank of the United States (EXIM Bank) and about $1.67 billion in private capital. The minerals to be stockpiled are key raw materials for manufacturing sectors such as automobiles and electronics, and they are intended to serve as a buffer in the event of supply chain shocks.
China accounts for about 70% of global REE mining and roughly 90% of processing. During the U.S.-China trade negotiations triggered by President Donald Trump’s tariff policy last year, the Chinese government restricted exports of REE used in aircraft engines, radar systems, electric vehicles, laptops and smartphones. As a result, manufacturers in the United States faced heightened supply chain risks.
The U.S. government plans to treat REE as strategic assets in order to counter China’s "bottleneck control" over supplies. The new stockpile base is modeled on the Strategic Petroleum Reserve (SPR), combining efforts to develop alternative REE supply sources with the accumulation of inventories. The loan term is 15 years.
Washington has already taken an equity stake in REE miner MP Materials and has been providing financial support to Vulcan Elements and USA Rare Earth as well. After the news broke, USA Rare Earth shares jumped 6% in early trading.
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pride@fnnews.com Reporter Lee Byung-chul Reporter