Defence contractors warned that a US initiative to stockpile critical minerals could drive up prices and unduly compete with industrial buyers for scarce materials. The Aerospace Industries Association (AIA) said the US government should proceed with caution to avoid distorting markets. The US Export-Import Bank unveiled a $12bn plan, Project Vault, to build up a strategic domestic reserve of metals for civilian industries.
Members of the AIA were concerned about Project Vault competing with corporate buyers for critical minerals amid an already constrained global supply, which could result in increased market prices and volatility. The group, which counts Palantir Technologies and BAE Systems among its members, said it wanted Vault to address its concerns before it made any purchases and to better explain how the initiative would work. Ex-Im Bank defended the project’s work, stating it is a shock absorber for American manufacturers, built to protect production lines from supply shocks, not compete with the companies it serves.
The Pentagon declined to comment. Metals including tungsten and rare earth elements are key to defence supply chains, but prices have soared as supplies have been squeezed by Beijing. Spain’s Abenojar Tungsten sold all the metal its mine will produce over its first decade to trading house Traxys, which will supply Project Vault among other clients.
The AIA also warned its members would need more time to comply with a January 1 US deadline banning defence groups from sourcing rare earth magnets from China for the military. Waivers for non-compliant items would be necessary beyond January 1, with the volume needed across the industry likely to be significant, creating an administrative bottleneck for the government unless a clear process was set up to deal with waiver applications.
Source: Financial Times Companies · Summarized by HeadlinesBriefing