The bank Trump depends on to obtain rare earth minerals | World news

But the obscure bank, which was established in 1934 to provide loan guarantees to foreign buyers of American-made goods, survived Trump’s first term. It is now being reinvented as a government catalyst for imports and is 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 American dependence on Chinese rare earths.

The government’s plan is to work with the private sector to scour the world for minerals and then store 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 funding.

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

“It’s actually about time there was coordinated action by some of the largest American companies that are exposed to these supply shocks coming from China to insulate themselves from the risk,” said Heidi Crebo-Rediker, a senior fellow at the Center for Geoeconomic Studies at the Council on Foreign Relations and 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 stock 60 essential raw materials throughout the United States.

The project has already attracted major corporations such as General Motors, Boeing and Google, according to a White House official, and they are joining forces to ensure they have access to key materials.

Economic security experts and analysts have praised the concept as a novel approach to bolstering the China-dominated rare earth supply chain. But details about where the minerals will be sourced remain scarce.

It is also unclear what impact a global buying spree will have on mineral markets and whether the United States, at least initially, will continue to rely on China to process rare earths. Storing the minerals in the United States could also be difficult.

“In the medium term, you 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 mining security.”

For decades, the United States has relied on reserves to stabilize the supply of minerals that are components of military equipment. However, Project Vault 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% of the world’s rare earths and chemically processes 90% of the global supply. When the Trump administration recently imposed high tariffs and broader technology controls, the Chinese government responded by implementing a licensing system that would give it control over rare earth shipments even outside of China.

China’s export restrictions, which have since been lifted, sparked panic in the Trump administration and within American companies, which rely on minerals critical for key components of the technology that powers cars, computers and phones.

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

In January, the Trump administration provided up to $277 million in direct financing 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 Department of Defense agreed to take a $400 million stake in MP Materials, a mining company that has struggled to turn a profit amid tough price pressure from China.

The United States has also signed economic agreements with countries around the world as it seeks to reshape the market. International policymakers met in Washington in February for the Geostrategic Resource Engagement Forum, which is a successor to the Mineral Security Partnership.

The policy frameworks aim to improve price coordination and boost 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 creating a supply chain for critical minerals outside of China could initially increase prices for certain commodities, but that eventually a reserve 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, such as Japan and South Korea, that have been building their own mineral reserves for commercial use.

“This could play a much bigger role in trying to establish an industry outside of China if done right,” said Nahm, who served as an economist in the Biden administration focused on industrial policy.

Sushan Demirjian, the Trump administration’s deputy trade representative, said at a trade conference in Washington last month that his agency, the Office of the U.S. Trade Representative, was working to produce a comprehensive, enforceable trade deal related to critical minerals.

The agreement would help establish a “minimum base market price” for critical minerals between like-minded trading partners, he said, to help cover the cost of producing and processing critical minerals and build their capacity. Other countries, particularly China, have reduced prices for certain minerals to such a low level that miners and processors in other countries cannot afford to stay in business. The administration will soon begin soliciting public comments on this deal, Demirjian said.

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

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

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

“It’s not clear to me that the government’s role is to guarantee stable prices to the private sector,” de Rugy said, suggesting that the Trump administration is expanding the definition of national security to justify its stockpiling initiative. “If it really is something that important, the private sector will do it.”

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

Fred Hochberg, who ran Ex-Im from 2009 to 2017, noted that through Project Vault, the bank was moving away from its focus on promoting U.S. exports and focusing more on imports. The adoption of the bank by a Republican administration, he noted, is also a change from when he was in charge of the bank and conservatives who detested “crony capitalism” were trying to shut it down.

“It’s changed because we have a Republican in the White House,” Hochberg said. “They have made a radical turn at the Export-Import Bank.”

At a Council on Foreign Relations event in Washington in late February, John Jovanovic, current president of Ex-Im, said he was prepared to work with American companies that participated in Project Vault to expand existing mineral storage and storage capacity. He added that the United States wanted to work closely with its allies to shore up rare earth supply chains.

“Basically, it’s about de-risking our supply chain,” Jovanovic said. “To eliminate risks in our supply chain, we have to work with our strategic allies.”