“The so-called Project Vault is meant to ensure that American businesses and workers are never harmed by any shortages,” Trump said yesterday at the White House.
“We don’t want to ever go through what we went through a year ago,” he said, alluding to trade spats between Washington and Beijing that saw restrictions on access to China’s dominant supply of rare-earth supplies.
The initiative is set to combine about US$2 billion in private capital with a US$10 billion loan from the US Export-Import Bank, in what senior administration officials earlier told Bloomberg would mark a first for the US private sector.
Ex-Im CEO John Jovanovic, standing behind Trump in the Oval Office, said the loan would mark the biggest Ex-Im deal in the history of the bank “by more than double”.
The effort is similar to the country’s current emergency stockpile for oil, but focuses on rare earths and critical minerals such as gallium and cobalt that are used in products like jet engines and iPhones.
“Just as we have long had a strategic petroleum reserve and a stockpile of critical minerals for national defense, we’re now creating this reserve for American industry, so we don’t have any problems,” Trump said.
It’s also seen helping buttress the economy from supply shocks, with China now the world’s dominant supplier of the materials.
Others present at the Oval Office event included General Motors Co CEO Mary Barra and mining billionaire Robert Friedland, representing both producers and users of critical minerals.
More than a dozen companies have agreed to participate so far, including GM, Stellantis NV, Boeing Co, Corning Inc, GE Vernova Inc and Alphabet Inc’s Google.
Commodities trading houses Hartree Partners LP, Traxys North America LLC and Mercuria Energy Group Ltd are expected to handle purchases of the raw materials to fill the stockpile.
The new venture will offer participating manufacturers a way to insulate their businesses from swings in prices for key materials without having to maintain their own stockpiles.
Under the arrangement, companies that make an initial commitment to purchase materials at a specified inventory price later – and pay some up-front fees – will be able to present Project Vault with a shopping list of preferred materials they need.
The project, in turn, will seek to procure and store the materials, with the manufacturers allowed to draw down their material stash as long as the firms replenish them.
“In the case of a major supply disruption, they will be able to access all of it,” the officials said.
A key element is that manufacturers who commit to buy a specified amount of materials at a set price also commit to repurchase the same amount at that same cost in the future.
The US already has moved to invest directly in domestic minerals companies to boost the production and processing of rare earths at home.
Abroad, the administration has announced agreements with Australia, Japan and Malaysia, and is expected to seek more agreements during a summit in Washington on Wednesday.
The EU and the US “are working with the objective to sign a mutually beneficial partnership to address the shared need for strengthening the resilience and diversification of critical minerals and derivatives supply, as well as certain demand-side measures,” a European Commission spokesman said.
Vice-president Stephane Sejourne will attend the summit on Wednesday, the spokesman added.