SunSirs: Can ‘Project Vault’ Resolve the ‘Bottleneck’ in the US Supply of Critical Minerals?

In February, the United States officially launched ‘Project Vault’. This is the first strategic reserve mechanism for critical minerals in US history to cover the entire civilian industrial chain, and—together with the Mineral Security Partnership (MSP) and the Forum on Geostrategic Engagement for Resources (FORGE)—forms a system designed to contain China’s access to resources. As a short-term supply chain defense tool for the US, ‘Project Vault’ possesses tactical value in stabilizing prices and mitigating the risk of supply disruptions. However, constrained by multiple factors—including inventory structure, industrial support systems, resource endowment and funding cycles—it is unlikely to achieve the strategic objective of ‘breaking free from dependence on Chinese minerals’.

A Core Buffer Tool in the US Resource Security Framework

The global transition to carbon neutrality has fuelled an explosive surge in demand for critical minerals. The International Energy Agency’s 2024 Global Critical Minerals Outlook predicts, under its Net-Zero Emissions (NZE) scenario for 2050, that global demand for lithium will increase approximately tenfold by 2050 compared to 2023, whilst demand for cobalt and rare earths will roughly double. competition for mineral resources has expanded from traditional bulk minerals to encompass rare and minor metals, rare earths and the full range of battery metals. In 2025, the US Geological Survey expanded its list of critical minerals from 50 to 60, bringing copper, gallium, germanium, antimony, tantalum and rare earths fully under national security controls, signalling that critical minerals have risen to become a core arena of competition among major powers.

For a long time, the US has faced two major supply chain weaknesses: firstly, a high degree of reliance on other countries for the deep processing stage; and secondly, between 2021 and 2025, the US maintained only a national strategic mineral reserve serving the defense and aerospace industries, whilst the civilian sector lacked a regular, state-level buffer stock. As a result, domestic battery and permanent magnet manufacturers have repeatedly faced supply crises characterized by raw material shortages and delivery constraints. Against this backdrop, the US has implemented a three-tier strategic framework: establishing the Multilateral Strategic Partnership (MSP) in 2022; upgrading the exclusive Forum on Resources and Geostrategic Economic Security (FORGE) in 2026; and simultaneously launching the US$12 billion Treasury Reserve Programme, thereby forming a three-pronged resource ‘de-risking’ strategy comprising ‘alliance containment, financial reserves and policy support’. The ‘Treasury Programme’, serving as the core financial buffer within this system, has been likened by the US to the Strategic Petroleum Reserve established in 1975 to address the oil crisis, with the aim of creating a ‘strategic buffer stock’ and a market regulation tool for the minerals sector. The ‘Treasury Programme’ moves away from a single-government reserve model to establish a closed-loop system involving four parties: ‘government policy-based finance, bulk commodity traders, leading downstream manufacturers, and overseas resource allies’.

To this end, the US government has introduced a series of key supporting policies: A price floor mechanism, whereby the government sets minimum purchase prices for critical minerals to incentivize overseas mines to increase supplies to the US; tariff exemptions, whereby minerals sold to the US by MSP allies and included in the Treasury reserves are exempt from import duties, thereby establishing an exclusive internal preferential trade zone; recycling support measures, with the Department of Energy simultaneously allocating special funds to support the power battery and rare-earth recycling industries, whilst prioritizing recycled metals for inclusion in the reserve rotation; Risk mitigation measures: US export credit agencies reduce political risk premiums and shorten credit approval cycles for allied mining projects, ensuring the sustained deployment of upstream production capacity.

The ‘Treasury Plan’ framework, mechanisms and strategic intent

This marks the first time a framework linking public and private reserves has been established. Funding for the ‘Treasury Plan’ comprises a US$10 billion long-term, low-interest loan from the Export-Import Bank of the United States (EXIM) and US$2 billion in private capital contributed by commodity traders and manufacturing enterprises; this is also the largest single specialized credit project in the bank’s 92-year history. The target stockpile volume is intended to meet 60 days’ basic consumption for the entire US manufacturing sector, covering 60 categories of critical minerals as defined by the USGS. The government will directly enter the market to stockpile strategic metals, with storage organized across three major regional hubs: the East Coast, the Midwest and the West Coast. Three international traders—Traxys North America, Mercuria Energy Americas and Hartree Partners—have been designated to oversee global mineral procurement, cross-border transport, warehouse management and dynamic stock rotation. They will utilize their global trade networks to connect with mining capacity in MSP member countries, prioritizing the procurement of compliant minerals from within the alliance.

Civilian industrial supply chain insurance mechanism. Core US manufacturing enterprises, including General Motors, Stellantis, Boeing, GE Vernova, Google, Corning and Western Digital, pay insurance premiums in advance, sign long-term off-take agreements and submit their annual mineral requirements in advance; when market supply is tight and prices rise sharply, they may draw on stockpiles from the reserve at an agreed minimum price, without having to compete for supplies at high prices on the spot market; in return, the enterprises undertake to give priority to

Achieve systematic objectives at the strategic level. Building on the US-DRC Strategic Partnership Agreement signed in December 2025, targeted export quotas for copper and cobalt from the Democratic Republic of the Congo (DRC) have been secured, severing the existing long-term supply chains to China at the trade level. This has established a floor for market prices to leverage overseas mineral investment, with the government injecting tens of billions into the market for long-term stockpiling. This creates a firm baseline of demand for the global mineral market, mitigating the downside price risks for US-funded enterprises in the DRC’s the ‘Lithium Triangle’ in Latin America and mining projects in Australia. In conjunction with the US International Development Finance Corporation’s (DFC) Overseas Minerals Fund and the US government-backed Orion Critical Mineral Consortium, this will form a comprehensive industrial chain toolkit comprising ‘reserve support, credit assistance and trade lock-in’, attracting private capital to invest in allied supply chains. This creates new leverage in geopolitical negotiations: on the one hand, exerting pressure on resource-rich nations to allocate exclusive mineral export quotas to the US; on the other hand, exporting the reserve-sharing mechanism to allies such as the EU, Japan and South Korea, and promoting the Western Hemisphere Resources Alliance (WHRA) and the Forum on Geostrategic Engagement in Resources (FORGE) to establish a unified procurement pool, thereby collectively reducing reliance on any single source of imports.

The ‘Vault Plan’ and its multidimensional impact on the global mineral supply chain

Structural diversion of global demand has intensified ‘internal competition’ for high-demand minerals. The ‘Vault Plan’ generates tens of billions in additional procurement demand annually, all of which is directed towards the production capacity of MSP allies. Capital is accelerating its influx into newly established mines in Australia, South America and Africa for high-demand critical minerals such as lithium, cobalt, nickel and rare earths.

Market-based pricing mechanisms are being weakened, whilst agreement-based pricing within blocs is on the rise. Traditional mineral markets rely on spot and futures markets to form a unified global price; however, the ‘Treasury Plan’—with its minimum price protection, long-term price-locked off-take agreements and tax-exempt policies within the alliance—is driving the Western bloc to establish an independent agreement-based pricing system. Mining companies in resource-rich countries are prioritizing long-term contracts with the US and the EU, leading to a contraction in spot market liquidity and a further fragmentation of global pricing power for commodities.

Global smelting capacity has become regionally fragmented, with two parallel supply chains operating in parallel. The US, in conjunction with Japan, South Korea and Australia, is vigorously supporting domestic rare-earth and battery metal refining capacity; stable procurement under the ‘Treasury Plan’ provides long-term demand guarantees for newly built smelters. The global division of labor in the mining sector has shifted from an efficiency-oriented to a security-oriented model, driving up overall development costs for the industry.

Resource-rich countries are facing increasing pressure to choose sides, whilst risks associated with Chinese-funded overseas projects are rising. Resource-rich nations in Africa, South America and Central Asia face dual pressures from US stockpiling orders and policy coercion; some countries have introduced restrictions on foreign equity holdings and requirements for localized processing of exports, leading to a simultaneous rise in risks associated with the approval, operation and cash flow recovery of Chinese-funded lithium, cobalt and rare-earth mining projects. The US is utilizing credit facilities from the Export-Import Bank and the Development Finance Corporation (DFC)—linked to the ‘Vault Plan’—to compete with China’s policy-based financial institutions for high-quality overseas mining rights.

Core structural flaws of the ‘Vault Plan’

The public-private participation mechanism is poorly designed and lacks sufficient coverage. Currently, participation in the ‘Treasury Plan’ is voluntary for enterprises; small and medium-sized manufacturing firms, with limited funds, are unable to afford long-term stockpiling premiums, meaning only leading enterprises in the aviation and automotive sectors can access the stockpiling system. Furthermore, premiums are not tiered according to corporate revenue or mineral consumption levels, leaving a large number of downstream SMEs unable to obtain risk hedging. Overall industrial coverage is less than 35 per cent, making it difficult to achieve protection across the entire industrial chain; Shortages of critical minerals often erupt suddenly due to geopolitical conflicts or abrupt policy changes; once such events occur, they inevitably trigger a run on reserves, rendering the insurance mechanism ineffective.

Mismatch in Stock Categories: Large-scale reserves of raw ores hold minimal strategic value. At present, the ‘Vault Plan’ prioritizes the procurement of low-cost copper and cobalt ores, as well as lithium ore, whilst neglecting reserves of highly processed materials such as high-purity oxides, rare-earth permanent magnets and battery-grade lithium salts. However, raw ore is not the same as end products. Even if tens of millions of metric tonnes of ore were stockpiled, the United States’ domestic smelting and separation capacity remains severely inadequate. In the event of a crisis, the country would still need to rely on overseas processing capacity, and the ore stockpiles would become ‘idle stock with no processing capacity’, failing to address the core bottleneck in the smelting process.

There is a severe mismatch between the capital cycle and the timeframe required to restructure the mineral supply chain. EXIM loans have a term of 15 years, but rebuilding an independent, end-to-end global supply chain for the extraction and smelting of critical minerals requires 20 to 30 years. The US$12 billion reserve can only provide a short-term buffer and cannot bridge the massive funding gap for medium- to long-term exploration, smelter construction and technological R&D; simply stockpiling ore cannot substitute for the three major long-term strategic investments: the development of domestic smelting capacity, deep-mine exploration and the establishment of a recycling system.

This will exacerbate the fragmentation of global markets and drive up the costs of the global green transition. Through targeted procurement, exclusive export quotas and priority access to reserves, the US is forcing resource-rich countries to establish two distinct trade systems—one for China and one for the US—thereby artificially severing the integrated global mineral supply chain. This dual-track trade system will increase the global aggregate procurement costs for lithium, cobalt and rare earths by 12–18 per cent, raising production costs for the global new energy and semiconductor industries and delaying the progress towards global carbon neutrality; the European Union and developing resource-rich countries will bear the brunt of these cost losses.

Reliance on a single resource-rich country cannot be mitigated through stockpiling. Taking cobalt as an example, 76 per cent of the world’s primary cobalt is produced in the Democratic Republic of the Congo, whilst nearly half of lithium concentrate comes from Australia; this high geographical concentration of resources is an objective constraint imposed by natural endowments. The plan can only stockpile existing mineral reserves and cannot increase the total global supply; should resource-rich countries introduce export restrictions or nationalization policies, the vulnerability of the US supply chain will be exposed once the reserves are depleted. Stockpiling can only delay the risk; it cannot eliminate the root cause of supply dependence.

The plan is unlikely to address weaknesses in the industrial chain. The US recycling rate for minerals is less than 10 per cent, and a circular economy system is entirely absent. Stockpiling cannot offset technological gaps; self-sufficiency rates for high-end products such as high-purity materials, special alloys and battery precursors are below 30 per cent, and simply hoarding minerals cannot compensate for shortcomings in high-end processing technology.

As for China, there is no need to overemphasize the short-term impact of the ‘Vault Plan’. Instead, China should capitalize on the strengths of its own comprehensive industrial system and coordinate five key pathways: the deployment of overseas resources, the development of domestic production capacity, the upgrading of strategic reserves, the development of the circular economy, and research and development into high-end technologies. In this way, China can establish a resilient and sustainable security system for critical minerals to mitigate the long-term uncertainties arising from global geopolitical resource competition. (Source: China Institute of Metal Mining Economics)

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