US unveils strategic plan to challenge China's dominance in critical minerals market

The United States proposes a multilateral framework, stockpiles, and investments to curb China’s control over rare earths, aiming to secure supply chains and counter Beijing’s market leverage amid international cooperation and practical hurdles.

The United States has proposed a multilateral framework aimed at curbing China’s dominance of rare earths and other critical minerals, unveiling a plan to create a preferential trading arrangement and pursue large-...

At a State Department ministerial hosted by Secretary of State Marco Rubio, more than 50 nations discussed a pact that would restrict purchases of critical minerals to participating members, set reference prices at each stage of production and use tariffs to uphold those price floors. Vice President JD Vance outlined the proposal, saying: “This morning, the Trump administration is proposing a concrete mechanism to return the global critical minerals market to a healthier, more competitive state,” and adding: “A preferential trade zone for critical minerals, protected from external disruptions through enforceable price floors. We will establish reference prices for critical minerals each stage of production, pricing that reflects real world fair market value. And from members of the preferential zone, these reference prices will operate as a floor, maintained through adjustable tariffs, to uphold pricing integrity.”

The initiative reflects mounting concern in Washington over Beijing’s stranglehold on the sector. Industry estimates cited in multiple reports show China accounts for roughly 70% of mining output and more than 90% of processing capacity for many rare earths, giving it outsized leverage during trade disputes and the ability to undercut rivals with low-priced exports.

Complementing the trade architecture, the administration is advancing a suite of market interventions and direct investments. According to AP, officials introduced “Project Vault”, a proposed US reserve of rare earth elements valued at about $12 billion, to be anchored by a $10 billion loan from the Export-Import Bank and supplemented by private capital. The reserve is intended to function similarly to strategic oil stockpiles, providing manufacturers and defence suppliers with a buffer against export curbs or market shocks.

Washington has also been moving capital into private industry. The Commerce Department has taken a minority stake in USA Rare Earth in a package that includes federal loans and equity to finance a Texas mine and a magnet plant in Oklahoma, and other federal commitments have flowed to firms such as MP Materials, Vulcan Elements and ReElement Technologies, AP reporting shows. Legislative proposals from a bipartisan group of lawmakers would go further, creating an independent agency with multibillion-dollar funding to stabilise supply, backstock and encourage domestic production.

Allies are not merely observers. Japan, for example, has reported progress in extracting rare-earth-bearing sediment from deep-sea deposits near Minamitorishima, an achievement Tokyo presents as a step toward reducing dependence on Chinese supply. Deputy Cabinet officials in Tokyo emphasise the need to validate extraction, refining and economic feasibility before scaling operations.

Despite broad international interest, analysts and participants caution the plan faces practical hurdles. Enforcing a bloc that bars members from sourcing outside suppliers, and policing price floors with tariffs, presents complex legal and political challenges. Critics warn that participating countries could be tempted to secure cheaper inputs through side agreements with non-members, undermining the mechanism’s effectiveness. Observers also note gaps in attendance at the talks, with some potentially pivotal territories absent, complicating efforts to build a truly global alternative supply network.

The US push also contains a clear security rationale. Officials have linked critical-minerals strategy to national defence readiness and industrial competitiveness, pointing to recent Pentagon and other federal expenditures targeting domestic capacity. Between direct procurement, loan guarantees and defence contracts, the past year has seen large public commitments intended to catalyse a US-centred supply chain.

Washington’s combination of a preferential trading arrangement, stockpiling and targeted investments marks a strategic shift toward more interventionist policies to counterbalance China’s market power. Whether that package will translate into reliable, economically viable alternatives for manufacturers of electric vehicles, consumer electronics, wind turbines and advanced weapons systems will depend on rapid scaling of mining and processing capacity among allies, the durability of political consensus, and the design of enforcement measures that can withstand commercial incentives to defect.

Source: Noah Wire Services