Shares of MP Materials Corp (NYSE:MP) rallied notably on Monday amid news of a significant U.S. government initiative aimed at diminishing China's dominance over rare earth elements. This plan, known as Project Vault, intends to establish a strategic reserve of critical minerals valued at approximately $12 billion.
The project’s funding structure includes a proposed $10 billion loan from the U.S. Export-Import Bank, supplemented by an injection of about $1.67 billion from institutional investors, according to disclosures. This financial commitment represents one of the most substantial efforts by the U.S. to secure essential minerals that underpin key sectors such as automotive manufacturing, aerospace, and energy.
China currently holds substantial control over the global production and processing of rare earth elements, a situation that has raised increasing concerns. These apprehensions intensified last year when Beijing implemented tighter export controls, impacting global supply chains.
To date, more than a dozen prominent corporations have expressed their commitment to the initiative. These include automotive giants General Motors and Stellantis, aerospace leader Boeing, glass manufacturer Corning, energy company GE Vernova, and tech giant Google. Complementing this industrial backing, three influential commodity trading firms - Hartree Partners, Traxys North America, and Mercuria Energy Group - will be responsible for the procurement and management of raw materials for the stockpile.
The Export-Import Bank's board was scheduled to vote on Monday regarding approval of this unprecedented 15-year loan, which would surpass previous deals by more than double in size, signifying the project's scale and strategic importance.
Project Vault is structured to assist manufacturers in managing mineral price volatility without the burden of maintaining their own reserves. Participating companies will submit their mineral requirements and agree to purchase materials at predetermined prices. The program will then acquire and store these materials, charging participating manufacturers carrying costs associated with interest on the loan and storage expenses.
Companies will have access to their allocated supplies as needed. However, usage must be balanced by replenishment, ensuring the sustainability of the stockpile.
Following the announcement, MP Materials' shares climbed 3.39%, reaching $60.76 at the time of publication, reflecting market reception to the government-led strategic initiative.
The broader market response underscores heightened interest in sectors tied to critical minerals amid ongoing geopolitical and supply chain concerns. Such volatility presents distinct trading opportunities alongside inherent risks in commodity sensitivity and market dynamics.