Trump administration seeks to reduce strategic minerals vulnerability

By EPN Staff

The Trump administration took significant steps earlier this year towards securing America’s supply of critical and strategic minerals.

The U.S. hosted the inaugural Critical Minerals Ministerial at the State Department on Feb. 4. The forum brought together 55 nations in an effort to coordinate critical minerals supply and policy as a counterbalance against the People’s Republic of China’s dominance of the market. 

In opening the summit, Secretary of State Marco Rubio said “our goal is to have a global market that’s secure, a global supply that’s enduring and is available to everyone, every nation, at an affordable price.  That’s a top priority for this administration.”

Why it matters

Critical minerals — defined as “a non-fuel mineral or mineral material essential to the economic or national security of the U.S. and which has a supply chain vulnerable to disruption” — are used in a multitude of consumer products. Those include computer chips, automobiles, and cell phones as well as in emerging technologies such as artificial intelligence. Importantly, they are also used in several military applications — including components in advanced jet fighters, missile defense systems and communications. 

China currently maintains a stranglehold on the mining and processing of many of these minerals, including 70 per cent of the world’s cobalt and lithium. China is also the world’s leading refiner of 19 out of 20 strategic minerals, with an average market share of 70 percent. This means that much of the Western world, including the U.S., is vulnerable to market and price manipulation and artificial supply disruptions by the Chinese Communist Party. This vulnerability was made painfully clear last October, when the People’s Republic of China threatened to impose an export ban on rare earth minerals to the United States and other Western militaries, forcing the U.S. into tariff negotiations.

The bigger picture

During the summit, Rubio and Vice President JD Vance announced the launch of the Forum on Resource Geostrategic Engagement (FORGE), a new plurilateral entity to succeed the 2022 Minerals Security Partnership, and proposed the creation of a preferential trade bloc in critical minerals. 

The proposed bloc would set market-based price floors on the commodities in an effort to create price stability in the face of the Chinese ability to manipulate the market through their dominance of the supply. Vance announced the initiative during his opening speech, saying “the Trump Administration is proposing a concrete mechanism to return the global critical minerals market to a healthier, more competitive state — a preferential trade zone for critical minerals, protected from external disruptions through enforceable price floors.  We will establish reference prices for critical minerals at each stage of production, pricing that reflects real-world, fair-market value.” 

In addition, the U.S. signed critical minerals frameworks and memoranda of understanding with eleven other nations during the ministerial, building on the ten that were signed in the previous five months, designed around securing critical mineral supply chains, establishing price supports, and encouraging public and private critical minerals investment. 

The White House also announced the creation of a strategic critical minerals reserve to be known as Project Vault. Intended to be similar in concept to the Strategic Petroleum Reserve, Project Vault is a public-private partnership financed by a $10 billion loan from the Export-Import Bank of the United States (EXIM), and nearly $2 billion raised from private capital.