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Since the COVID pandemic, Americans have had a crash course on the importance of rare earth elements and recognized the unpleasant reality that the People’s Republic of China (PRC) has a near stranglehold on their mining and processing. Practically everything we manufacture in the modern world, from fighter jets to medical equipment to cameras, now requires some quantity of these materials, and we are almost entirely at the mercy of the PRC for them.
Recognizing that this dependency is a potential national security crisis, President Donald Trump has directed an all-of-government initiative called “Project Vault” to protect the American people from immediate shocks while building up our ability to supply ourselves in the future.
The Chinese regime has shown itself very willing to use its rare earths advantage as blackmail against the United States as well as manufacturing allies such as Japan. At the end of President Trump’s first term, China issued veiled threats about limiting their exports to retaliate for U.S. tariffs on Huawei. Those threats became realities last year as China announced export controls and then outright bans on the export of rare earth elements to foreign militaries. When President Trump issued tariff threats of his own, the PRC backed down, but the scale of our vulnerability was clear.
To be sure, much of this problem has been of our own making. After World War II, at the dawn of electronics manufacturing, the United States was dominant in rare earths, which were primarily extracted and processed at the Mountain Pass facility in California. In 1980, under President Jimmy Carter, however, the Nuclear Regulatory Commission placed some rare earths under the same rules as radioactive materials, severely restricting their extraction and processing and making even these limited activities prohibitively expensive in the United States.
The resulting decline in production was accelerated by the Mountain Pass wastewater spill in 1996, which resulted in the closure of that facility in 2002 on environmental grounds. Additional projects were not developed as permitting times average 29 years in America and so would have been economically unviable. Mountain Pass only resumed operations in 2017, but now, with the support of the Trump administration, will expand its facilities in 2026. But it will be a long and difficult battle to regain the advantage America once squandered in the name of climate purism.
Meanwhile, China seized the advantage with a much more permissive regulatory and permitting environment that allowed them to capture as much as 70% of extraction and 90% of processing of rare earths. During his first term, President Trump started righting this disproportionate advantage with Executive Order 13817, which identified 35 key elements and laid out a strategy to secure a ready supply of them. In 2020, the President declared a national emergency regarding rare earths, directing an interagency process to increase domestic production.
After President Trump’s re-election, his administration has taken further action to alleviate China’s staggering advantage through agreements with producing allies such as Australia that will give us a much more secure and reliable supply chain than buying from Communist China. Now, Project Vault is designed to further insulate America from dependence on the PRC for these vital materials.
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Modeled on the Strategic Petroleum Reserve, established in 1975 to protect the U.S. from the energy shocks caused by the 1973 Arab oil embargo, Project Vault establishes a stockpile of rare earths for the use of the U.S. military and private sector in the event that China cuts off supplies.
In addition, the administration is continuing the hard work of deregulation and permitting reform that will allow American companies to begin to extract and process rare earths again here at home, unburdened by Biden administration “environmental justice” efforts such as the Justice40 Initiative that prevented them from taking meaningful action in this space.
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In order to counter the PRC predatorially preserving its rare earths monopoly, as a matter of national security, President Trump has directed the Export-Import Bank to support Project Vault with a $10 billion dollar loan that will support both the establishment of the stockpile and guarantee sufficient new American-controlled rare earth production at a rate that will ensure our defense industries are no longer at the mercy of PRC supply chains.
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ExIm has established a public-private partnership called Vault Company to oversee the project and ensure taxpayer money is responsibly invested so that the American extraction and processing sector can be quickly re-established and render further investment unnecessary.
As such, ExIm is an indispensable national security tool for repairing all the damage China has done in its campaign to corner the market on rare earths and use their dominance to blackmail America. Congress should therefore move swiftly to reauthorize the Bank to ensure that not only Project Vault succeeds, but also that ExIm can continue to support President Trump’s efforts to keep the American people safe from Chinese aggression.
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