The factory floors went silent. Production lines ground to a halt. It was the spring of last year when whispers turned to shouts: China was squeezing the supply of rare earth minerals, and American manufacturers were gasping for air. Fast forward, and it seems someone in Washington finally woke up to the scent of scorched metal and broken promises.
Hindsight, as they say, is always 20/20, and the former president seems to have stumbled upon a tentative solution to last year’s mineral mess with China: a strategic reserve. Call it “Project Vault”—a $12 billion pile of, well, intentions, mostly.
A Warning Five Years Ago
Remember 2019? China dropped hints, not-so-subtle ones, that it might retaliate against trade restrictions by holding back minerals. We’re talking about the stuff you’ve probably never heard of—dysprosium, terbium, indium, and yttrium. You know that iPhone in your pocket? There’s tungsten in it. And guess where a chunk of tungsten comes from?
Then, five years later, China made good on its threat, slapping those rare earth metals onto its export control list. It was like watching a slow-motion train wreck, wasn’t it?
Since China controls a staggering 69% of the production for these minerals, American manufacturers started shutting down plants. The former president offered concessions and lowered the tariffs.
The White House spin machine called it “a massive victory that safeguards U.S. economic strength and national security while putting American workers, farmers, and families first.” But, let’s be real, it felt more like a loss.
Why did Trump lower tariffs?
Faced with manufacturers grinding to a halt thanks to China’s mineral grip, lowering tariffs became a pressure release valve. It wasn’t a strategic masterstroke, more like a necessary evil to keep the lights on, however dimly. This highlights how reliant global supply chains had become, and the vulnerabilities it created.
“Project Vault”: Too Little, Too Late?
So, this “Project Vault,” sounds like a pile of money—$2 billion (€1.85 billion) from private capital, and a $10 billion (€9.26 billion) bank loan. It’s meant to be a lifeline for manufacturers facing price shocks.
Companies will agree to buy rare earth minerals ahead of any future crisis, at a pre-agreed price. Meanwhile, “Project Vault” needs to find and store all these minerals. It’s like buying a car but needing to build the road first.
The idea is they hold the inventory, and manufacturers can tap into it when needed, with the obligation to replenish the stockpile afterward.
“We don’t want to ever go through what we went through a year ago,” the former president said. And that much is clear.
What is a mineral reserve?
Think of it as an emergency stash. A mineral reserve is a stockpile of strategically important resources set aside to cushion against supply disruptions or price spikes. It’s intended to provide manufacturers with a safety net when global events threaten their access to raw materials. The problem is, a reserve only works if it’s actually stocked and ready before the crisis hits.
A Hard Hat After the Landslide
“We don’t want to ever go through what we went through a year ago,” the former president said. In other words, the barn door is getting bolted after the horses have not only bolted, but are halfway to another state.
The project’s purpose is to give manufacturers a lifeline in the case of some event that causes a price shock. Companies will commit to buy rare earth minerals ahead of any such shock at some specific price. In the meantime, Project Vault will have to actually find and store all these minerals. Project Vault holds that inventory, and manufacturers can draw material against their allotment when necessary, but that will come with the obligation to replenish the stockpile afterwards.
How does China control rare earth minerals?
China’s dominance in rare earth minerals isn’t accidental. Decades of strategic investment in mining, processing technologies, and supply chain infrastructure have given them a near-monopoly. They also have lower environmental regulations than many Western nations, making it cheaper to mine and process these materials, further solidifying their control.
It’s tempting to see “Project Vault” as a step in the right direction. But is it enough? And more importantly, is it too late to undo the damage from past missteps and missed warnings?