Highlights

• Project Vault is a $12B U.S. critical minerals reserve (EXIM-backed), but experts warn it may warehouse raw materials in the wrong form factors—ore instead of separated oxides, metals, alloys, and powders needed for defense production.
• The real chokepoint isn't upstream mining but midstream processing: separation, refining, conversion, and powder production where China dominates and a stockpile alone cannot substitute for industrial capability.
• Effective governance requires form-factor tiering, anti-crowding rules with the Defense Logistics Agency, transparent crisis triggers, and defense priority clauses—or Vault becomes an expensive symbol while China retains processing leverage.

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A piece (opens in a new tab) via the Atlantic Council points to the U.S. government’s public-private partnership Project Vault as a response to mineral chokepoints. Rare Earth Exchanges™ separates verified facts (Vault’s financing and structure) from narrative leaps (F-35 radar claims; “stockpile = resilience”), and we integrate various critiques linked to these important authors: form factor, governance, and midstream capacity decide whether Vault strengthens America—or becomes an expensive illusion.

First Project Vault itself is real: EXIM and the U.S. government describe it as a U.S. Strategic Critical Minerals Reserve backed by $10B in EXIM financing plus roughly $2B private funding.     

Morgan D. Bazilian (opens in a new tab) and Lt. Col. Jahara “FRANKY” Matisek argue Project Vault was triggered by a sobering moment: the U.S. Air Force receiving F-35s without the next-gen AN/APG-85 radar due to gallium sourcing delays under China’s export controls. That storyline captures a real fear—America’s defense supply chain can be throttled by mundane inputs. But the F-35 radar-delivery claim is still reported with caveats, and not conclusively confirmed in the public record.  Rare Earth Exchanges™ has other chatter about real risks to our defense and the rare earth and critical mineral supply chain, but they are not mentioned here.

Bazilian and Lt. Col. Matisek hit the nail on the head:

“The true chokepoints of defense production (opens in a new tab) happen midstream (opens in a new tab): the highly specialized stages of separation, refining, conversion, and powder production.”

The Great American Risk: Warehousing Rock While the Midstream Burns

Rare Earth Exchanges™ has been blunt: the U.S. is at risk of confusing financial architecture with industrial capability. A reserve can smooth shocks, but it does not magically create separation, refining, alloying, powder-making, or magnet manufacturing capacity—especially for heavy rare earths.

This is where Vault can fail patriotically: by purchasing “critical minerals” in the wrong form factor (ore/oxide when you need metal/alloy/powder), it may stockpile insurance paperwork, not production continuity.

The “Golf Club” Critique: A Reserve for Members, Not a Nation?

The Rare Earth Observer lands a sharp jab (opens in a new tab): Vault looks less like a sovereign national reserve and more like a members' club financed with public credit—serving participating firms first, with unclear benefits for broader industrial depth. It also notes a practical oddity: many named participants do not materially consume rare earths at scale, raising the question of whether “critical minerals” becomes a broad bucket that dilutes mission focus.

What’s Notable for Rare Earths: Governance Is the Weapon

Vault is directionally right—America must fight supply coercion with strategy, not speeches. But the winning design is boring and brutal (and the authors capture some of them): tiered form factors, anti-crowding rules with DLA/NDS, transparent triggers, and guaranteed access for defense-critical nodes. Otherwise, Vault risks becoming a pricey symbol—while China keeps the real leverage: processing.

Project Vault Governance Architecture: The Five Integration Principles*

Integration Principle	What the Authors Mean	Why it Matters	Risk if Ignored
Form-Factor Tiering	Separate bulk raw materials from processed, defense-usable materials	Ore and mixed oxides do not equal magnets. Defense production requires separated oxides, metals, alloys, powders, and qualified components	A warehouse full of ore, but no usable magnet feedstock. False sense of readiness
Anti-Crowding Guardrails (DLA Coordination)	Coordinate procurement between Vault and the National Defense Stockpile (NDS) to avoid competing bids.	Prevents the government from bidding against itself for scarce midstream materials like Dy oxide or NdFeB alloy	Price spikes, supply distortion, and weakened defense acquisition leverage
Trigger Ladder (Release Protocols)	Establish predefined escalation rules for when material is released (gray zone → crisis → war).	Gallium-style export controls may require early intervention before a declared conflict	Slow response in coercive trade scenarios; paralysis during ambiguity.
Defense Priority Clauses	Ensure certain materials automatically flow to critical defense nodes during crisis.	Protects production of F-35s, missiles, radar systems, naval propulsion, etc.	Inventory exists but cannot be accessed in time. Bureaucratic gridlock.
Stress Testing & Red Teaming	Simulate crises to test whether rules work under pressure	Identifies bottlenecks in separation, conversion, and magnet manufacturing before real disruption occurs.	Discovering rule failures during an actual supply shock.

*Morgan D. Bazilian (opens in a new tab) and Lt. Col. Jahara “FRANKY” Matisek

See the author’s article in Atlantic Council (opens in a new tab)                                                                                                                                .