The Bank Trump Is Relying On for Rare-Earth Minerals

 

 

“The Export-Import Bank is providing a $10 billion loan to Project Vault, an initiative to stockpile critical minerals. The project is the administration’s latest effort to reduce reliance on China.

 

When President Trump made his first run for the White House more than a decade ago, he derided the Export-Import Bank of the United States as a “featherbedding” corporate welfare scheme.

 

“I don’t like it because I don’t think it’s necessary,” Mr. Trump said in 2015, echoing the concerns of many Republicans who wanted to abolish America’s export credit agency.

 

But the obscure bank, which was established in 1934 to give loan guarantees to foreign buyers of American-made products, survived Mr. Trump’s first term. It is now being reimagined as a government catalyst for imports and sits at the center of the Trump administration’s global race for critical minerals.

 

In early February, the White House announced a new initiative — Project Vault — to reduce America’s reliance on Chinese rare earths. The government’s plan is to work with the private sector to scour the world for minerals and then stockpile them in the United States. The initiative will be backed by a $10 billion loan from the bank, the largest in its 92-year history, along with $2 billion in private-sector funds.

 

The effort is an extension of Mr. Trump’s aggressive style of industrial policy, which has included tariffs and government stakes in companies from key sectors. Now Project Vault has emerged as a another intervention that aims to shield companies from crisis if China again opts to withhold the critical magnets that power cars and computers, as it did last year.

 

“It’s actually overdue for there to be coordinated action from some of the largest U.S. companies that are exposed to these supply shocks coming from China to actually insulate themselves from the risk,” said Heidi Crebo-Rediker, senior fellow in the Center for Geoeconomic Studies at the Council on Foreign Relations and a former chief economist at the State Department.

 

The project will establish a U.S. Strategic Critical Minerals Reserve, a public-private partnership. The goal is to store 60 essential raw materials across the United States. The project has already attracted large corporations such as General Motors, Boeing and Google, according to a White House official, and they are joining forces to ensure that they have access to key materials.

 

Economic security experts and analysts have praised the concept as a novel approach for reinforcing the rare-earths supply chain, which is dominated by China. But details about where the minerals will be sourced remain scarce. It is also not clear what impact a global buying spree will have on minerals markets and if the United States will, at least initially, still need to rely on China for processing the rare earths. Storing the minerals around the United States could also be complicated.

 

“In the medium term it can source from China, but the strategic goal is to ensure that American manufacturing is not disrupted,” said Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies. “There will be no economic security without mineral security.”

 

For decades, the United States has relied on stockpiles to stabilize supplies of minerals that are components of military equipment. Project Vault, however, is different because of its focus on businesses and the private sector, reflecting how national security and economic security have merged as government priorities.

 

China mines 70 percent of the world’s rare earths, and does chemical processing for 90 percent of the global supply. When the Trump administration recently imposed high tariffs and more expansive technology controls, the Chinese government responded by rolling out a licensing system that would give it control over rare-earth shipments even outside China.

 

China’s export restrictions, which have since been lifted, set off a panic in the Trump administration and within corporate America, which relies on critical minerals for key components of technology that powers cars, computers and phones.

 

In recent months, the White House has been ramping up a governmentwide effort to make the United States less dependent on China for minerals and processing.

 

In January, the Trump administration extended up to $277 million in direct funding and up to $1.3 billion in loans to USA Rare Earth, a mining and manufacturing group, to help develop its supply chain for rare-earth metals and magnets. Last July, the Defense Department agreed to take a $400 million stake in MP Materials, a mining company that has struggled to turn profits amid tough price pressure from China.

 

The United States has also been striking economic agreements with countries around the world as it looks to reshape the market. International policymakers gathered in Washington in February for the Forum on Resource Geostrategic Engagement, which is a successor to the Minerals Security Partnership. The policy frameworks are aimed at improving coordination on pricing and to jump-start investment in mining and processing in countries such as Morocco, Paraguay and Peru.

 

Jonas Nahm, an associate professor at the Johns Hopkins School of Advanced International Studies, said that the creation of a critical minerals supply chain outside China could initially increase prices for certain raw materials but that eventually a stockpile could help reduce price volatility. That could depend on how well the Trump administration, which in many areas of economic diplomacy has chosen to act unilaterally, collaborates with nations, like Japan and South Korea, that have been building their own minerals stockpiles for commercial use.

 

“This could play a much bigger role in trying to establish a non-China industry if done well,” said Mr. Nahm, who served as an economist in the Biden administration White House focused on industrial policy.

 

Sushan Demirjian, an assistant trade representative for the Trump administration, said at a trade conference in Washington last month that her agency, the Office of the United States Trade Representative, was working on producing a lengthy and enforceable trade agreement pertaining to critical minerals.

 

The agreement would help set “minimum, market base price” for critical minerals among like-minded trading partners, she said, to help cover the cost of the production and processing of critical minerals and develop their capacity.

 

Other countries, particularly China, have driven down prices for certain minerals to such a low level that miners and processors in other countries cannot afford to stay in business.

 

The administration would soon begin soliciting public comments on this agreement, Ms. Demirjian said.

 

Beyond Project Vault, the bank, known as Ex-Im, has over the last year issued letters of interest to consider project financing for lithium extraction in Arkansas, nickel and cobalt production in Australia and tin extraction in Britain.

 

For years, free-market oriented conservatives assailed such government interventions in the economy.

 

Veronique de Rugy, a senior research fellow at the Mercatus Center, a libertarian-leaning research organization at George Mason University, lamented that the program lacked oversight. She also argued that since the United States already had a stockpile of minerals for military needs, the private sector should create its own stockpile without government help.

 

“It is unclear to me that it is the role of the government to guarantee stable prices to the private sector,” Ms. de Rugy said, suggesting that the Trump administration is stretching the definition of national security to justify its stockpiling initiative. “If it really is such an important thing, the private sector will do it.”

 

That view was once mainstream in Republican policymaking circles, but it has fallen out of fashion.

 

Fred Hochberg, who led Ex-Im from 2009 to 2017, noted that through Project Vault, the bank was shifting away from its focus on promoting U.S. exports and concentrating more on imports. The embrace of the bank by a Republican administration, he pointed out, is also a shift from when he was in charge of the bank and conservatives who loathed “crony capitalism” tried to shut it down.

 

“It’s changed because we have a Republican in the White House,” Mr. Hochberg said. “They have taken an about-face on the Export-Import Bank.”

 

At a Council on Foreign Relations event in Washington in late February, John Jovanovic, the current chairman and president of Ex-Im, said he was prepared to work with American companies that were involved in Project Vault on expanding existing warehouse and storage capacity for minerals. He added that the United States wanted to work closely with American allies on shoring up rare-earth supply chains.

 

“Fundamentally, this is about de-risking our supply chain,” Mr. Jovanovic said. “In order to de-risk our supply chain, we have to work with our strategic allies.”” [1]

 

 

“Other countries, particularly China, have driven down prices for certain rare earth minerals to such a low level that miners and processors in other countries cannot afford to stay in business.”

 

 This is a scale effect: The Chinese are serving all world, producing large scale, their product is the cheapest. In changing technologies it cannot be beaten by putting in American government money. Sooner or later these American government supported businesses require so much money, that they are pushed out of the market. This is a typical Solyndra case. No government can beat important market.

 

China dominates the rare earth mineral market through massive scale, processing roughly 90% of global supply. By leveraging low costs and vertical integration, China can indeed squeeze out foreign competitors, making it difficult for government-subsidized, non-Chinese firms to compete on price alone.

 

Key details regarding this market dynamic:

 

    Market Dominance: China produces roughly 60% of mined rare earths and controls around 90-92% of the global processing/separation stage.

    Economic Strategy: China has historically used its dominant position to manipulate prices, sometimes restricting supply to boost prices or, conversely, flooding the market to drive down prices and push competitors out.

    The "Solyndra" Risk: Subsidizing domestic production (as in the U.S.) to compete with these low prices is challenging, as demonstrated by the potential for high-cost, government-backed firms to fail when faced with lower-cost alternatives.

 

    Alternative Supply Issues: Although other countries have significant reserves, such as Vietnam and Brazil, they lack the immediate, large-scale refining infrastructure that China has built.

 

Therefore, the argument holds merit that, without developing competitive, non-subsidized supply chains, Western firms face a steep challenge competing with China's established, vertically integrated, and lower-cost industry.

 

Tell this to Mr. Trump. Obama. Solyndra. Do you remember?

 

 

1. The Bank Trump Is Relying On for Rare-Earth Minerals. Rappeport, Alan.  New York Times (Online) New York Times Company. Mar 9, 2026.