The United States is establishing a strategic stockpile of critical minerals for civilian industry for the first time. President Donald Trump is allocating $12 billion to protect American companies against supply shocks and to reduce dependence on China.
Project Vault
The project, dubbed Project Vault, combines a $10 billion loan from the U.S. Export-Import Bank with about $2 billion in private capital.
That money is used to purchase and store important raw materials for sectors such as the automotive industry, technology and aviation. Trump announced the plan on Sunday in Washington, Bloomberg wrote.
The strategic stockpile can be compared to the Strategic Petroleum Reserve, the emergency stockpile of oil that the US has maintained since the 1970s. This time it is not about oil, but about minerals such as gallium, cobalt and nickel. These are indispensable for products such as iPhones, batteries and jet engines.
Last year, the US government also created a strategic Bitcoin reserve, following a presidential order from Trump. All seized Bitcoin (BTC) have since been kept in long-term custody in the national treasury.
China plays a dominant role in the extraction and processing of raw materials. When Beijing imposed export restrictions last year, some American manufacturers had to cut production. That moment served as a wake-up call in Washington.
With Project Vault, Trump wants to prevent the industry from getting stuck again. “This should ensure that American businesses and workers are never hit by shortages,” the president said in making the announcement.
Big names from the industry are participating
More than a dozen major companies have now joined the initiative. This includes General Motors, Stellantis, Boeing, Corning, GE Vernova and Google. Three major trading houses, Hartree Partners, Traxys North America and Mercuria Energy Group, are responsible for purchasing the raw materials.
Companies agree in advance which materials they want to purchase later at a fixed price. Project Vault purchases and stores those raw materials, while participants pay a fee for storage and financing. In the event of a serious disruption, companies may use their entire stock, provided they replenish it later.
According to the government, this has a price dampening effect and reduces extreme fluctuations. For example, the price of nickel once shot up sharply after the Russian invasion of Ukraine, with major consequences for company balance sheets.
Market responds immediately
The news immediately caused movement on the stock market. Shares of American companies active in rare earths and critical minerals skyrocketed.
Trump emphasized that the stock is not only strategically, but also financially attractive. According to him, American taxpayers can even benefit from the interest on the loan. “We expect to make money from this eventually,” he said.
Later this week, the US will speak with dozens of countries about further cooperation on critical minerals. Washington wants to further spread the supply and weaken China’s grip on this market.
Source: https://newsbit.nl/trump-lanceert-strategische-voorraad-kritieke-mineralen-van-12-miljard/
