US lawmakers propose $2.5B minerals reserve

A bipartisan group of U.S. 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.

A Strategic Resilience Reserve is to be established and managed by a seven-member board like the Federal Reserve, the news agency reported after viewing the bill. The board would have authority to buy and store critical minerals across the country. Priority would be given to recycled materials, but minerals extracted from mines could also be eligible.

The new stockpiles are designed to help stabilize the prices of key minerals essential for electric vehicles, high-technology products and defence systems, given the influence Beijing has on the global market. 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.

It wasn’t immediately clear how the bill’s concept differed from the Pentagon’s plans to spend $1 billion on a mineral stockpiling as reported by London’s Financial Times in October. Or how it might include the public-private partnership outlined in August to store metals at the world’s largest ammunition dump, in Nevada. 

Price stability

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

However, Beijing has repeatedly denied weaponizing its metals leadership. After signing a trade truce with the U.S., its government reiterated its commitment to “upholding the security and stability of global production and supply chains.”

Even so, China has created a huge lithium 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.

Lawmakers backing the measure said it could buffer the U.S. 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.

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