US lawmakers propose $2.5B critical minerals reserve

[Ben Graham]

A bipartisan group of US lawmakers on Thursday introduced legislation to create a $2.5 billion critical minerals stockpile as a counter to China’s dominance in the sector, according to Reuters.

The proposed bill is designed to help stabilize the prices of key minerals that are essential to electric vehicles, high-technology products and defense systems, given the influence Beijing has on the global market.

China’s stranglehold on the critical mineral supply chain is well documented. The Asian nation accounts for about 60% of the world’s mined rare earths and nearly all of its processing. It also controls a major share of the refined production of lithium, graphite and cobalt.

For some minerals, such as lithium, China has created a huge glut that has driven down prices, rendering many projects in the West unprofitable. In the rare earth sector, it deployed export curbs that have also resulted in high prices.

US urges partners and allies to increase critical minerals supply chain resiliency

The proposed bill would help counter Chinese attempts to “weaponize its influence over prices and volumes in the contest for access to critical minerals,” the legislation document reads, as seen by Reuters.

However, Beijing has repeatedly denied such claims. After signing a trade truce with the US, its government reiterated its commitment to “upholding the security and stability of global production and supply chains.”

Strategic reserve

Under the proposed bill, a Strategic Resilience Reserve will be established and be managed by a seven-member board, a governance structure resembling that of the Federal Reserve. The board would have authority to buy and store critical minerals in facilities across the country. Priority will be given to recycled materials, but minerals extracted from mines could also be eligible.

The reserve board will also be authorized to sell minerals for commercial and defense use, with the proceeds reinvested to sustain operations. Allied nations could participate by contributing at least $100 million to the reserve.

Lawmakers backing the measure say it could buffer the US industry from supply disruptions and help establish a Western price benchmark for minerals that are currently thinly traded and heavily influenced by Chinese production and export policies.

Senator Jeanne Shaheen, a Democrat from New Hampshire, emphasized the bill’s importance to US national security, stating that “targeted investments and stockpiling key inputs will help insulate the US from foreign threats.” Other co-sponsors include Republican Senator Todd Young of Indiana and Representative Rob Wittman of Virginia.

To become law, the bill must be approved by both the House of Representatives and the Senate and be signed by President Donald Trump.

The proposal comes a day after the Trump administration held back on new tariffs on critical minerals, and instead introduced new supply chain proclamation including the consideration of price floors.