The Trump administration’s newly launched $12-billion Project Vault will provide a tactical buffer against critical minerals supply shocks, but it falls short of addressing deep structural weaknesses in the US supply chain, consultancy Wood Mackenzie has cautioned.

Officially designated the US Strategic Critical Minerals Reserve, the initiative combines a $10-billion facility from the Export-Import Bank of the United States (Exim) with about $2-billion in private capital to acquire and store minerals essential to the defence, automotive and technology sectors.

The reserve is designed to create a 60-day strategic supply buffer for US consumers, potentially cushioning short-term disruptions and price volatility.

Principal research analyst – energy transition and battery raw materials James Willoughby said the programme could also play a role in unlocking project finance by providing greater offtake certainty.

“Project Vault introduces a meaningful buffer against market volatility and gives Exim-backed projects greater offtake certainty,” he said. “That financing stability could help unlock new supply.”

By acting as a guaranteed buyer through Exim-supported offtake agreements, the reserve could help emerging critical minerals projects secure funding, particularly in jurisdictions aligned with US supply chain priorities.

However, Wood Mackenzie’s analysis indicates that the effectiveness of the stockpile will depend heavily on how funds are allocated. If the budget is spread proportionally across all 44 designated minerals, the reserve would cover about 45 days of demand. A more targeted focus on niche or illiquid metals could extend coverage to 60 days for selected commodities, though others would receive no support.

The US remains fully import-dependent for 15 critical minerals and relies on imports for more than half of demand for a further 32, according to the US Geological Survey. While the country mines several key commodities, much of the material is exported for processing – predominantly to China – underscoring the limited domestic midstream capacity.

“Stockpiling is not a silver bullet,” Willoughby said. “Without domestic permitting reform, stronger allied supply partnerships and meaningful midstream capacity expansion, the underlying dependency remains.”

Wood Mackenzie also flagged procurement risks, noting that the public announcement of the initiative and its budget could strengthen suppliers’ negotiating positions.

“The government has effectively shown its hand,” Willoughby said. “Suppliers now have greater leverage, which could push procurement costs higher.”

While required volumes are expected to account for less than 1% of global demand for most metals, limiting broader price disruption, the impact could be more pronounced in smaller markets. In commodities such as antimony, purchases could represent up to 3% of global demand.

There is also the risk of geopolitical retaliation. China has previously restricted exports of rare earths to Japan in 2010 and graphite to Sweden in 2020, and export licensing mechanisms are already in place for several key minerals.

“Retaliatory measures cannot be ruled out,” Willoughby added. “The durability of Project Vault will be tested during commodity downturns and in the event of geopolitical escalation.”

Historical precedent also raises questions about the long-term viability of strategic stockpiles. Cold War-era reserves managed by the Defence Logistics Agency were largely liquidated after 1993 as carrying costs increased and policy priorities shifted.

Operating expenses for Project Vault could exceed $1-billion a year, driven by warehousing, insurance and financing costs. Unlike crude oil stored in the Strategic Petroleum Reserve, many critical minerals require specialised storage and periodic rotation.

Whether the reserve becomes a durable strategic asset or a costly policy misstep will depend on how it performs during its first significant supply shock.

“On its own, the Vault is a tactical buffer but not a comprehensive solution,” Willoughby said, “but viewed as part of the broader US critical minerals strategy, the Vault has a defined role to play.”