By Jon Emont

The new U.S. strategy for rare-earth minerals looks a lot like China's old one.

A U.S. government agency is providing most of the funding for a $12 billion government-led stockpile of minerals, some of which will likely be sourced from mining companies partly owned by the government.

The plan for the newly created U.S. Strategic Critical Minerals Reserve -- which President Trump called Project Vault -- borrows from Beijing's longstanding playbook because that is the rival Washington is trying to combat. China last year brandished its control of rare-earth minerals and processing to extract trade concessions from Trump.

"That's been a total paradigm shift in how the U.S. looks at these things," said Morgan Bazilian, director of the Payne Institute at the Colorado School of Mines.

Beijing recognized years ago that supporting local mining companies would ensure a stable supply of materials for its manufacturers and give it a tool for international coercion. At the same time, state involvement doesn't mean total state control: Many Chinese miners are in the private sector -- including some listed on stock exchanges -- and they compete for profits and market share.

Likewise, the U.S. government is investing in private-sector miners and bringing companies such as Boeing, General Motors and Alphabet's Google into Project Vault.

In January, USA Rare Earth, a vertically integrated emerging producer of rare earths and magnets, said it was offered potential government funding of up to $1.6 billion, with some company shares to be given to the government.

Embracing a Chinese-style model of state-driven capitalism, the U.S. government has made similar investments in other domestic minerals producers since last year and intervened in strategic industries. It took a 10% stake in chip maker Intel and a "golden share" in U.S. Steel when the latter was acquired by Japan's Nippon Steel.

For Project Vault, the Export-Import Bank, a U.S. agency, will provide loans of up to $10 billion, while private capital is expected to provide about $2 billion to the project.

Trump didn't give details of how the vault would operate, but it could provide a steady buyer to tide American and allied producers through the boom-bust cycle, a traditional feature of the minerals business that has often deterred private investment. John Jovanovic, the chairman of the Export-Import Bank, said the stockpile would support domestic processing of critical raw materials as well as protect U.S. manufacturers from supply shocks.

Beijing has long amassed stockpiles of metals such as copper, aluminum and zinc, and it upgraded the system in 2024 to add more types of minerals.

When China slashed exports of rare-earth magnets last spring, American companies such as Ford were forced to temporarily shut down factories because of supply shortages.

The name Strategic Critical Minerals Reserve echoes the Strategic Petroleum Reserve, a federally owned and managed oil stockpile stored in underground salt caverns at four sites in the U.S. Like the new minerals reserve, the petroleum stockpile dates to a foreign supply shock -- the Arab oil embargo of the 1970s. With an authorized storage capacity of 714 million barrels, it is designed to deter threats by hostile nations to interrupt supplies.

The mineral reserve calls for crucial raw materials to be stashed in secure facilities across the country. The Export-Import Bank's announcement said the stockpiles would be independently governed, but didn't describe the entity that would control them.

Experts say minerals would be trickier to stockpile than petroleum. The Strategic Petroleum Reserve includes sweet and sour crude, while there are 17 rare earths as well as dozens of other critical minerals. The quantities needed change over time depending on how cars, planes and other industrial goods are manufactured.

If the facilities are stocked with relatively unprocessed raw materials, they couldn't be used immediately in factories during an emergency. But storing the finished version of the products, such as rare earth magnets, presents its own issues because product specifications evolve. "There is no one-fits-all," said Thomas Kruemmer, a rare earths analyst based in Singapore.

"We're focused on the critical raw materials," said Jovanovic of the Export-Import Bank.

Assuming the vault doesn't buy from China, it could take years to build a stockpile that would sufficiently shield the U.S. in an emergency. For materials such as scarce "heavy" rare earths, there is little processing capacity outside of China, and the plants now being built will likely meet only a portion of demand in the U.S. and allied nations over the next couple of years.

A new processing plant for gallium, a key semiconductor material dominated by China, is expected to start up in Australia at the end of 2026, with backing from the Japanese, American and Australian governments.

"We don't want to ever go through what we went through a year ago," Trump said.

Write to Jon Emont at jonathan.emont@wsj.com

(END) Dow Jones Newswires

February 03, 2026 22:00 ET (03:00 GMT)

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