Known as Project Vault, the initiative will combine up to $10 billion in long-term financing from the U.S. Export-Import Bank (EXIM) with approximately $2 billion in private capital.
Under the plan, Project Vault will acquire and store minerals such as gallium, cobalt, lithium, rare earth elements and other strategically important materials used in products ranging from electric vehicles and batteries to smartphones, jet engines and advanced defense systems.
Moreover, the plan is also designed as an independently managed public-private partnership. Participating manufacturers commit in advance to purchase specific quantities of materials at predetermined inventory prices and pay upfront costs.
In return, the project will acquire and store these materials on their behalf, charging transportation costs associated with loan interest and storage fees. Companies will be allowed to draw down on inventories as long as they replenish them, while retaining full access in the event of a major supply disruption.
A key feature of the design is a buyback obligation: manufacturers who agree to buy a certain amount of material at a certain price also commit to buy back the same amount of material at that price in the future. The government sees this as a stabilizing mechanism that could dampen extreme price fluctuations in crucial mineral markets.
Administration officials said the effort became more urgent after Beijing tightened export controls on certain critical materials last year, forcing some U.S. manufacturers to cut production, underscoring the extent of China’s influence on global supply chains.
China currently dominates both mining and processing of many crucial minerals, giving it significant influence over prices and availability.
EXIM Bank’s board is expected to vote on approving the 15-year, $10 billion loan, which would be the largest financing deal in the agency’s history, more than double the previous record.
“Project Vault is designed to protect domestic producers from supply shocks, support U.S. production and processing of critical raw materials, and strengthen the U.S. critical minerals sector,” said EXIM Chairman John Jovanovic said in the announcement.
More than a dozen companies have already signed up, officials said. Participants include automakers and industry giants such as General Motors (NYSE:GM), Stellantis NV (NYSE:STLA), The Boeing Company (NYSE:BA) and Alphabet’s Google (NASDAQ:GOOGL).
A step in the right direction
Market analysts view this move as indicative, but warn that it will not immediately displace Chinese dominance. In an email commentary obtained by The Investing News Network (INN), Dmitry Silversteyn, an analyst at Water Tower Research, described Project Vault as “a step in the right direction” while emphasizing its limits.
“The announcement is a step in the right direction toward minimizing China’s ability to disrupt the U.S. economy and manufacturing/technology base by manipulating both the price and supply of critical elements,” Silversteyn said.
However, he noted that this is “not a quick fix” as many US-backed mining projects are in early stages of development or producing limited commercial volumes.
The initiative also follows previous, less successful efforts. Last summer, the US withdrew a proposed $500 million tender for cobalt supplies after failing to attract sufficient supply to meet requirements.
Regardless, mining companies and developers have generally welcomed the renewed impetus. Warwick Smith, CEO of American Pacific Mining, said Project Vault underlines the growing strategic importance of domestic copper supplies.
“President Trump and the current administration once again shed important light on the need for more critical metals in the United States” said Smithnoting copper’s role in electrification, transmission infrastructure and advanced manufacturing.
Trump has done that too met recently with GM Chief Executive Mary Barra and mining entrepreneur Robert Friedland in an effort to bridge the interests of mineral producers and major industrial consumers.
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Securities Disclosure: I, Giann Liguid, have no direct investment interest in any company mentioned in this article.
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