America Can Stockpile Rare Earths-But It Cannot Stockpile Industrial Power

Highlights

• Kevin Esvelt's 'resilience markets' proposal focuses on privately financed stockpiles, but overlooks China's dominance in rare-earth processing and manufacturing capacity.
• The U.S. DoD's MP Materials partnership and Project Vault already go beyond stockpiling, targeting industrial capacity through equity, loans, and price floors.
• Inventories of NdPr, Dy, and Tb can blunt short-term coercion, but America needs separation, refining, alloys, magnets, and skilled workers to compete long-term.
• China's rare-earth advantage was built over decades through coordinated state policy—a challenge that no insurance-style stockpile model alone can counter.

A stockpile can buy America time. It cannot buy back an industrial base after the shooting starts. That is the tension inside Kevin M. Esvelt’s ambitious American Affairs proposal (opens in a new tab) for privately financed “resilience markets.” His thesis is clever: reward investors for anticipating crises and warehousing scarce goods before they are needed. But applied to rare earths, the model rests on a dangerous simplification. America’s vulnerability is not principally that too little material sits in warehouses. It is that China dominates the industrial machinery required to turn minerals into usable strategic components.

REEx Insight: The Missing Factory Behind the Warehouse

Esvelt’s argument assumes capital will identify vulnerabilities more efficiently than government and that legally protected crisis premiums can transform preparedness into an investable asset class. Investors would stockpile rare earths, sign pre-crisis supply contracts, and receive the contracted value if Washington later requisitioned the material.

The author brings an unusual lens. Esvelt is an MIT Media Lab associate professor, evolutionary engineer, and cofounder of SecureBio and the SecureDNA Foundation. His expertise is principally biological security—not mineral economics or rare-earth processing. That does not invalidate the proposal, but it helps explain its emphasis: catastrophe preparedness and inventories rather than industrial production systems.

Esvelt correctly identifies China’s roughly 90% share of rare-earth processing and its demonstrated use of export restrictions. He also concedes resilience markets cannot replace systematic analysis of national dependencies.

Yet the rare-earth problem is deeper.

America Is Already Experimenting Beyond Esvelt’s Model

The U.S. is increasingly pursuing industrial policy, not merely emergency inventory. DoD’s MP Materials partnership combines a $150 million heavy-rare-earth separation loan, a $400 million equity investment, an NdPr price floor, and long-term magnet demand support. This is government deliberately altering project economics to create capacity that markets alone have struggled to finance.

Meanwhile, Project Vault already provides up to $10 billion of EXIM financing alongside roughly $2 billion of private capital for a demand-driven strategic mineral reserve—remarkably close to part of the problem Esvelt wants markets to solve.

The critical omission is therefore adversarial industrial competition. China’s advantage was built through decades of processing capacity, technical knowledge, scale, downstream manufacturing, and coordinated state policy spearheaded by the Communist Party. Stockpiling NdPr, Dy, or Tb can blunt coercion and bridge temporary disruptions. But inventories eventually empty. America needs mines—but especially separation, refining, metals, alloys, magnets, qualified customers, skilled workers, and economically sustainable plants.

Esvelt has designed an intriguing insurance policy. But the Great Powers Era demands something far larger: an industrial system capable of producing long after the strategic stockpile begins to empty. The harder question is whether American policymakers, institutions, and capital markets are prepared to think—and invest—at the scale this new era of industrial competition requires.