Andy Home, Andy Home: The US and Canada are now working together to secure critical minerals.

The U.S. president Donald Trump just announced "Project Vault", an $12 billion stockpile of critical minerals intended to protect U.S. manufacturing companies from disruptions in supply.

The U.S. will need help to fill up the Vault's 60 critical minerals.

The friend-shoring game is back and with a vengeance. As the U.S. tries to build a metal alliance to loosen China’s grip on the metals at the core of modern technology.

The U.S. has more friends now than ever.

At the February 4th ministerial conference on critical minerals, 54 countries were present. 11 new bilateral agreements?and? a trilateral agreement between the European Union and Japan have been signed.

When it comes to essential minerals, we're all in the same boat, according to U.S. vice president JD Vance.

LOCKING SUPPLY

The United States' mineral policy has been heightened by China's increasing export restrictions, which are affecting a number of critical but arcane metals like gallium, germanium, and rare earths.

The easy part is to fund a new stockpile. It is harder to secure the metal you want, especially if China is your main global supplier.

The best solution is to invest directly in mines, and use off-take agreements to secure future raw material supplies.

Even better, if the mines have already been put into production.

Greenland has been in the news recently. Its large reserves of rare Earths are locked in the rock below the?Arctic Ice.

Central Africa is where the most important minerals are found.

CONTESTING CONGO

The Democratic Republic of Congo, a major copper producer and a host of other?metals listed by the U.S. Geological Survey as critical minerals, is a world leader in cobalt production.

Since the U.S. brokered an agreement between Congo and Rwanda to reduce tensions on the border, U.S. agencies are rushing to secure the mineral rights.

A consortium led by Orion Resource Partners, a private equity fund, and the U.S. International Development Finance Corp. (DFC) are in talks to purchase a 40% stake of Glencore's copper-and-cobalt operations.

DFC plans to also buy into a joint venture between Swiss trading house Mercuria, and Congo's government?mining entity Gecamines in order to market the government share of national production. The U.S. would be entitled to first refusal.

This is part of a multifaceted campaign to counter China's dominance in one of the most resource-rich nations on earth.

This is also a model for others. That's why there was such a large turnout last week in Washington.

RESHAPING the Market

The FORGE alliance or Forum on Resource Geostrategic Engagement, to give it its complete title, aims not only at securing vital minerals, but also at reshaping markets.

Vance, speaking at the Washington meeting, said: "We know today that the international market for essential minerals is failing."

It's "a market that is distorted beyond recognition. One that penalizes strategic investments, diversification and long-term planning."

Vance did not name any names, but the Chinese Elephant in the Room loomed big.

China's dominance in the critical mineral supply chain allows it to both restrict production as it has done recently and flood the world with excess to crush prices and competitors.

A preferential trade area with price-gap subsidies and enforceable floor prices is the proposed solution to combat such predatory practices.

It is hoped that the mitigation of price risks will encourage more private capital to invest in mining and processing.

Metals World

The Trump administration has made no secret about its dislike of 'global multilateral organizations, but it had no choice when it came to minerals that were critical.

Although federal money is pouring into domestic mining projects, it will be months or even years before they produce their first metal.

It's too much to wait, given China's ability to deprive critical manufacturing sectors of essential inputs.

The list of critical mineral is long and no country has the ability to process all of these minerals or have the reserves to exploit them.

Even China is affected. The fact that it controls the supply of finished products like rare earth magnets is a lie. It depends on raw materials imported from countries such as Congo.

The U.S.'s re-embrace a "multilateral mineral policy" is an acknowledgement of the complex nature of modern metallic supply chain.

All of them begin in the earth. If you don't own your own mines and deposits, it's best to find someone who does.

Andy Home is an author and columnist. Enjoying this article? Open Interest (ROI), a data-driven, thought-provoking commentary on the markets and finance. Follow ROI on LinkedIn, X and X.

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(source: Reuters)