Project Vault and Much More Will Parry China’s Monopoly on Rare-Earth Minerals

Commentary

Washington has launched an ambitious three-pronged program to break China’s current chokehold on the global supply of rare-earth elements. Because these metals are critical to modern technologies—from automobiles to household appliances to artificial intelligence (AI) to jets to rockets to weaponry—there is a clear sense of urgency.

Washington’s efforts will, of course, take time to have an effect, but ultimately, they promise to end China’s near monopoly in this important area and, with it, Beijing’s ability to hold the world hostage. A next step will, hopefully, blunt China’s power in pharmaceuticals.

These steps are a response to two instances in 2025, when, in response to the Trump administration’s round of tariffs on Chinese goods entering the United States, Beijing closed off Chinese exports of rare-earth elements. These measures riveted Washington and governments throughout the developed world. China, after all, controls some 70 percent of the world’s rare-earth mining and fully 90 percent of its refining.

The threats were significant enough to extract immediate trade concessions from Washington. They also instilled a determination in the White House to end the United States’ and the world’s vulnerability to Beijing’s export policies.

What Washington has organized is remarkable, given the compressed timeframe since Beijing prompted action. Two parts of Washington’s initiative are purely domestic. The third part constitutes a novel international approach to the problem.

The simplest and most straightforward aspect of the program is called Project Vault. It aims to shield U.S. manufacturers from supply shocks by building a critical materials stockpile. Modeled on the Strategic Petroleum Reserve, it is the first of its kind for critical materials. The effort will start with $12 billion in funding: a $10 billion loan from the Export-Import Bank of the United States and some $2 billion in private investment. It will prioritize purchases of cobalt, nickel, and lithium.

Prong two of this venture will establish something like a sovereign wealth fund that will combine public and private funds to make long-term investments in essential materials in the United States and globally. It will, for the first time ever, make U.S. taxpayers shareholders in critical materials mining and refining operations. Planning puts the initial capital commitment at some $1.8 billion with an ultimate goal of $5 billion in capital.

Prong three of the plan is by far the most novel and daring aspect of this venture. Sometimes called the Pax Silica Initiative or, more formally, the Forum on Resource Geostrategic Engagement (FORGE), it, when established, amounts to an alliance of nations to build secure supply channels for critical materials, semiconductors, AI infrastructure, and advanced manufacturing. The cooperation will extend across mining, refining, logistics, and technology.

The initiative, according to Vice President JD Vance’s remarks at a ministerial meeting in Washington in February, will also set reference prices for critical materials at each stage of production. This is a critical element, as China has, in the past, driven out non-Chinese ventures in critical materials by flooding global supplies and depressing prices to unprofitable levels. By setting price guidelines, FORGE will guard against such monopolistic behavior by Beijing and thereby encourage long-term investment in the area.

The exact roster of FORGE participants is not yet available, but already, FORGE has received interest in Europe, Asia, and the Middle East, including Japan, South Korea, Australia, the Netherlands, India, and the United Arab Emirates. Deals with the European Union, the UK, Argentina, the Philippines, Peru, and Mexico have also been mentioned.

It will, of course, take time for this ambitious venture to take shape and even longer for it to have an impact. Of these three aspects of Washington’s plan, Project Vault should move fastest. But the breadth of the effort and the speed at which it has developed should put Beijing on notice about what comes of trying to hold the world to ransom on critical materials. Now, Beijing is surely also aware that future export controls will only accelerate the development of all aspects of this program. Washington’s next step should be aimed at blunting China’s power in global pharmaceuticals.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.