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 the Vault with 60 minerals that are currently classified as "critical".

The U.S. is reviving friend-shoring as it seeks to form a metal alliance with China to break its stranglehold on the metals at the heart of modern technology.

The U.S. is more popular than ever.

At the ministerial gathering on "critical minerals" in Washington, DC, held on February 4, 54 countries were present. 11 new bilateral agreements and a trilateral deal with the European Union, Japan and Japan were 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.

Off-take agreements can be used to secure future raw material supplies by investing in mines themselves.

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 still untapped and locked up in the rock under the Arctic ice.

Central Africa is the place where real minerals mining has taken place.

CONTESTING CONGO

The Democratic Republic of Congo, a world leader in cobalt production and a copper-producing powerhouse, is also home to a variety of other metals that are listed on the U.S. Geological Survey’s Critical Minerals List.

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

DFC plans to also?buy into a joint-venture between Swiss trade house Mercuria and Congo's Gecamines state mining entity in order to market the government share of national production. The DFC also plans to?buy into a joint venture between Swiss trade house Mercuria?and Congo's state mining entity Gecamines to market the government's share of national production.

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, is about more than just securing vital minerals. It's also about reshaping markets.

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

The market is "distorted beyond recognition. It punishes strategic investments, diversification and long-term planning."

Vance did not name 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 floor prices that are enforceable and price-gap subsides to prevent such predatory practices is the proposed solution.

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 not hidden its aversion to multilateral global institutions. However, when it comes critical minerals, it is forced to create its own.

Federal money is pouring into domestic mining projects. However, it will take many months or even years for them to produce their first metal.

It's a long wait, given China's ability to deprive critical manufacturing sectors of inputs.

The list of critical mineral is long and no country has the ability to process all of these minerals into metal.

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

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

They all start underground. 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. The opinions expressed in this column are Andy Home's. 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)