A flurry of announcements this week is reshaping efforts by the United States and the European Union to loosen China’s grip on rare earth minerals, the building blocks of next-generation technology.
US President Donald Trump on Monday unveiled Project Vault, a plan to build a US strategic stockpile of critical minerals, expand domestic rare-earth processing capacity and secure long‑term supply deals with manufacturers.
In another development, the EU on Tuesday set out plans for a rare-earth alliance with US to bolster its own resilience.
Meanwhile, US Vice President JD Vance gave a keynote speech to delegates from key mineral‑producing countries on Wednesday, seeking to secure a rare-earth trading bloc to challenge China.
Rare earths and other critical minerals like lithium, cobalt and copper are essential for electric vehicles, robotics, artificial intelligence, defense and renewable energy.
What is Project Vault?
Project Vault is the Trump administration’s initiative to stockpile more than 50 critical minerals, including rare earths.
“For years, American businesses have risked running out of critical minerals during market disruptions,” Trump said during the project’s launch at the White House on Monday.
“Today, we’re launching what will be known as Project Vault to ensure that American businesses and workers are never harmed by any shortage.”
Trump added: “You’re covering everything with this … We’re not just doing certain minerals and rare earths. We’re doing everything.”
The US Strategic Critical Minerals Reserve will be backed by a $10 billion (€8.48 billion) loan from the US Export-Import Bank (EXIM), with up to an additional $2 billion in private capital.
EXIM Bank president and chairman John Jovanovic told CNBC that the project creates a public-private partnership formula that “is uniquely suited and puts America’s best foot forward.”
More than a dozen companies have signed up to participate, including General Motors, Stellantis, Boeing, GE Vernova and Google. Bloomberg News reported that three commodities trading houses have signed deals to handle raw material purchases.
Officials say the initiative is also meant to support US manufacturing by keeping supply-chain risks off companies’ balance sheets and ensuring a 60-day mineral reserve for emergencies.
At current prices, the $12 billion budget would be enough to buy every gram of critical minerals utilized outside of China in a year.
Why did Trump launch Project Vault?
Project Vault is designed to counter China’s longstanding use of rare earth minerals as geopolitical leverage, particularly during last year’s tariff war with Washington.
China currently produces about two-thirds of the world’s rare earths and refines nearly 90% of them, giving it a stranglehold on global supply.
Beijing twice moved to put controls on rare-earth exports during US-China trade negotiations, only to relax the curbs as tensions eased. This served as a reminder of how quickly China can weaponize its dominance in the sector.
These curbs caused immediate supply shortages and production delays among US and European manufacturers, accelerating calls for diversification of the critical minerals.
Chinese leaders have wielded rare earths as leverage before. In 2010, Beijing abruptly cut exports to Japan during a diplomatic dispute, jolting supply chains and prices.
The planned US mineral stockpile is modeled on the Strategic Petroleum Reserve, which was created in response to the oil crisis in the 1970s, when an Arab oil embargo caused oil prices to quadruple, leading to widespread fuel shortages.
The new rare-earth reserves will help protect US manufacturers from supply shocks while supporting domestic production.
Project Vault reflects a broader effort by the Trump administration to harden US supply chains against geopolitical pressure. Over the past year, the Pentagon has spent nearly $5 billion to secure its access to the minerals.
Last month, a bipartisan group of lawmakers proposed a new agency with $2.5 billion to spur production of rare earths and other critical minerals.
What role is the EU playing in the fight for rare earths?
The EU faces many of the same vulnerabilities as the US. Europe has almost no domestic rare-earth refining capacity and relies overwhelmingly on Chinese processors for the permanent magnets used in wind turbines, electric vehicles and jet fighters.
The EU’s Critical Raw Materials Act sets non-binding targets for domestic extraction, processing and recycling, while new funding aims to accelerate minerals projects in Sweden, Finland, and Greenland, which is part of the Kingdom of Denmark.
These regions have some of the bloc’s most promising rare-earth deposits — with Greenland offering particularly significant potential despite its non-EU status, which Trump cited recently when he floated a fresh bid to bring the island under US control.
Several European firms, including Germany’s Vacuumschmelze, are expanding permanent-magnet production to give the continent its first scalable alternative to Chinese supply.
After Brussels this week proposed a rare-earth alliance across the Atlantic, the US Trade Representative’s office confirmed Wednesday that it would partner with the EU and Japan to “mitigate critical supply chain vulnerabilities.”
A joint press statement said the partners are “taking significant steps towards increasing their economic security and national security” by boosting resilience in the critical minerals sector.
How is the US working with rare-earth suppliers?
Representatives of 55 countries, including EU states and Japan, gathered at the State Department in Washington, DC, on Wednesday for a summit on critical minerals.
Vice President Vance told them that the US wants to help build a “trading bloc” of rare earths among allies and partners that guarantees US access while “also expanding production across the entire zone.”
The nations gathered also included major or emerging suppliers like Australia, India and Thailand, along with rare-earth consumers and processors, South Korea, Germany and Canada.
Several African nations, including the Democratic Republic of Congo, were also present. They are seen as critical partners in the supply of other critical minerals.
The proposed trading bloc would regulate minimum prices for critical minerals to prevent China from suddenly ramping up exports and undercutting other countries.
“We want to eliminate that problem of people flooding into our markets with cheap critical minerals to undercut our domestic manufacturers,” Vance said.
“Investment is nearly impossible, and it will stay that way, so long as prices are erratic and unpredictable,” he added.
Project Vault, the US-EU-Japan alliance and the planned critical minerals trading bloc are widely seen as helping to boost short-term protection and longer-term diversification from China.
But many analysts believe it will take five to 10 years of sustained investment to mount a credible challenge to the world’s leading producer and could create a glut of critical minerals if countries follow the US’s example and create their own stockpiles.
Edited by: Ashutosh Pandey
