US Launches 'Vault' Project To Stockpile Rare Earth Metals

Washington doesn't want to "depend on hostile countries."

Washington has announced the launch of Project Vault, a large-scale $12 billion program to purchase and store strategic minerals key to the automotive, energy and defense industries. The initiative is aimed at reducing U.S. dependence on China, which controls more than half of the world's production of metals such as gallium, germanium and lithium, writes Financial Times (translated by Charter97.org).

The project will see three trading companies purchase the metals, and the U.S. Export-Import Bank will provide $10 billion in loans to finance the purchases. Specific volumes and implementation timelines have not yet been disclosed. Industry officials warn that the emergence of an "unlimited buyer" could further increase the price of rare minerals, which are already in short supply.

"Ultimately, the rest of the world will compete with the United States for these materials," said Jan Giese, a Frankfurt-based trader.

The Vault project is a consequence of the U.S. authorities' desire to secure strategic supply chains to "never depend on hostile countries."

But experts warn of the risks: mass accumulation of minerals runs counter to a multilateral approach. "This is an emergency solution, not a long-term strategy to create an international system to secure critical resources," said Patrick Schroeder of Chatham House. He said the launch of Vault could spark similar programs in Europe and elsewhere, increasing competition in the market.

Vendors already include Mercuria, Hartree Partners and Traxys, as well as new projects in Australia and Congo. Experts caution that producers' reliance on U.S. purchases may be short-term and unstable, and that stopping purchases or releasing accumulated stockpiles could dramatically adjust prices.

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