Why in news?
The United States government has announced “Project Vault,” a $12 billion plan to build a strategic stockpile of rare earths and other critical minerals. The initiative aims to reduce the country’s dependence on Chinese supplies and to protect manufacturers from supply disruptions. It combines public funding with private investment and is modelled on the U.S. Strategic Petroleum Reserve.
Background
Rare earths and other critical minerals are essential for modern technologies, including electric vehicles, wind turbines and electronics. The United States currently imports most of these materials, with China dominating both mining and processing—about 70 percent of global rare earth mining and 90 percent of processing. Previous supply shocks have underscored the vulnerability of U.S. industries. Project Vault was announced in February 2026 to build a domestic buffer stock similar to how the Strategic Petroleum Reserve stores oil.
How Project Vault works
- Public–private financing: The reserve will be funded by a $10 billion loan from the U.S. Export–Import Bank and about $2 billion in private capital from companies that rely on these minerals. Firms such as Western Digital, GE Vernova and Boeing have signalled interest in participating.
- Stockpile mechanism: Companies will pay an upfront fee and agree to purchase minerals from the reserve at a fixed price in the future. In return, they gain access to the stockpile during supply disruptions. When they draw down the reserve, they must replenish it later and pay carrying costs, ensuring the stockpile remains filled.
- Strategic goals: By underwriting demand and stabilising prices, the U.S. government hopes to encourage domestic mining and processing, diversify supply chains and reduce reliance on adversarial countries. The scheme complements incentives such as tax credits for battery makers.
Project Vault reflects growing geopolitical competition over critical minerals. If successful, it could foster a domestic supply chain for rare earths and provide a template for other countries seeking strategic autonomy.
Source: BS
