Trump administration’s US$12bn Project Vault offers short-term supply buffer but fails to address structural bottlenecks

The Trump administration’s US$12 billion Project Vault aims to establish a 60-day strategic buffer of critical minerals for US consumers. While the initiative could help cushion short-term supply disruptions and volatile prices, it does not resolve the structural weaknesses in the US critical minerals supply chain, according to Wood Mackenzie. 

Officially designated the U.S. Strategic Critical Minerals Reserve, Project Vault combines a US$10 billion Export-Import Bank (EXIM) facility with approximately US$2 billion in private capital to purchase and store minerals vital to defence, automotive and technology sectors. 

A tactical buffer with financing benefits 

Project Vault will provide US consumers with protection against short-term supply shocks and price volatility. Offtake agreements supported by EXIM also create a guaranteed buyer for emerging projects, enabling the bank to continue financing critical minerals developments globally. 

“Project Vault introduces a meaningful buffer against market volatility and gives EXIM-backed projects greater offtake certainty,” said James Willoughby, Principal Research Analyst - Energy Transition & Battery Raw Materials at Wood Mackenzie. “That financing stability could help unlock new supply.” 

However, Wood Mackenzie’s analysis shows that stockpile composition will determine effectiveness. If funds are distributed proportionally across all 44 designated minerals, the reserve would cover about 45 days of demand. A narrower focus on niche and illiquid metals could extend coverage  to the 60-day target for select metals, but others would miss out completely. 

Structural bottlenecks remain 

Despite its scale, the reserve alone will not resolve deep-rooted supply chain challenges, Wood Mackenzie warned. 

The US is fully import-dependent for 15 critical minerals and relies on imports for more than half of demand for another 32, according to the US Geological Survey. Midstream processing remains the most severe constraint. While the US mines several key minerals, much of the material is exported for processing, primarily to China. 

“Stockpiling is not a silver bullet,” said Willoughby. “Without domestic permitting reform, stronger allied supply partnerships and meaningful midstream capacity expansion, the underlying dependency remains.” 

Procurement risks and geopolitical exposure 

Wood Mackenzie noted that by publicly announcing both the initiative and its budget, the US may have weakened its negotiating position.  

“The government has effectively shown its hand,” said Willoughby. “Suppliers now have greater leverage, which could push procurement costs higher.” 

Wood Mackenzie notes that required volumes represent less than 1% of global demand for most metals, limiting broad price disruption. However, in smaller markets such as antimony, purchases could represent up to 3% of global demand. 

China could also respond strategically. Beijing has previously restricted exports of rare earths to Japan (2010) and graphite to Sweden (2020), and export licensing mechanisms are already in place for several key minerals. 

“Retaliatory measures cannot be ruled out,” Willoughby added. “The durability of Project Vault will be tested during commodity downturns and in the event of geopolitical escalation.” 

Strategic investment or costly lesson? 

Cold War-era Defence Logistics Agency stockpiles were largely liquidated after 1993 as carrying costs mounted and political priorities shifted. 

Operating costs for Project Vault may exceed US$1 billion annually due to warehousing, insurance and financing expenses. Many critical minerals require specialised storage and periodic rotation, unlike oil in the US Strategic Petroleum Reserve. 

Whether Project Vault proves to be a durable strategic investment or an expensive lesson in market timing will become clear only when it faces its first real supply shock. 

“On its own, the Vault is a tactical buffer but not a comprehensive solution,” said Willoughby, “but viewed as part of the broader US critical minerals strategy, the Vault has a defined role to play.”