Executive Summary

Historically, governments have established strategic reserves of key goods like oil, helium, and grain that can make purchases to keep essential industries afloat during volatile periods of low prices and sell stockpiled commodities to address shortages during times of crisis. With the Chinese government recently banning or tightening restrictions on numerous critical mineral exports to the United States, national policymakers are increasingly turning to stockpiling as a potential insurance policy against mineral supply disruptions that could impact key U.S. industrial capabilities in the energy, semiconductor, space, metallurgical, and defense sectors.

On his first day in office and in his eighth executive order as a returning president, President Trump ordered the secretary of defense to review the posture and management of the National Defense Stockpile (NDS) “to ensure that the National Defense Stockpile will provide a robust supply of critical minerals in event of future shortfall.” Across the partisan aisle and months earlier during the 2024 presidential election, former Vice President Kamala Harris’s campaign had pledged to “build a U.S. stockpile and create incentives to build out domestic processing capacity of critical minerals necessary for our economic and national security.”

Many proposals focus on the role of stockpiles as a tool to sustain essential industries through geopolitical upheaval. Numerous policy commentators have pointed to the depletion of the NDS since the early 1990s as a critical vulnerability, calling upon Congress to dramatically expand the NDS to ensure supply coverage for a multi-year national emergency.

Policymakers have also proposed ideas for a Strategic Mineral Reserve, which would reimagine the U.S. Strategic Petroleum Reserve (SPR) to support resilience, stability, and investment in key commodity markets. This proposal would apply the Federal Reserve’s framework to manage financial risk ex-ante and ex-post to target the vulnerabilities that stifle investment in commodity markets. Another Resilient Resource Reserve framework developed with industry consultation suggests a wholly-owned government corporation with the authority to take similar market actions. Such a program could exist either in addition to or as an alternative to amassing minerals in an emergency stockpile similar to the NDS. Such proposals exhibit key differences from a simple, physical stockpile. Policymakers have described such a reserve program as aiming to “steady prices, protect consumers from price spikes, and generate stable revenue for producers during low-price periods.” Several proposed legislative bills, namely the Critical Materials Future Act and the Securing Essential and Critical U.S. Resources and Elements (SECURE) Minerals Act, call respectively for the establishment of a pilot-scale and full-size program. Such proposals chiefly emphasize the market certainty and investment de-risking benefits that a reserve program would provide to domestic mine and processing projects, with the accumulation of physical stocks of minerals primarily envisioned as a means to establish resilient markets and help self-finance the program rather than as a national emergency supply. In many cases, a reserve program might execute contracts that are of a financial nature only, without any direct physical offtake or storage of commodities.

In general, the U.S. faces daunting challenges to physical mineral stockpiling that severely limit the feasibility and efficacy of physical stockpiling as a solution to current critical mineral supply chain challenges. Downstream supply chain gaps in mineral processing and manufacturing of key technology components constrain the usefulness of physically stockpiling many raw materials. Meanwhile, current market and geopolitical conditions do not align well with ambitious efforts to accumulate stockpiles of many minerals. For example, the current stock of 14,000 kg of germanium metal in the NDS would only meet half a year of current U.S. consumption, yet cannot be accumulated to a greater degree under the current Chinese export ban without dramatically exacerbating the supply shortage confronting the U.S. semiconductor sector. The NDS can neither statutorily serve private industry outside of an armed conflict, nor can it realistically meet U.S. advanced technology sector needs under most supply chain disruption scenarios.

U.S. critical mineral security ultimately requires broader industrial policy to develop projects that fill missing supply chain capabilities. Military needs may require targeted rejuvenation of the NDS, but such needs should not overly dictate the nation’s wider mineral policy strategy. A U.S. strategic mineral reserve can provide valuable support for domestic supply chain development efforts by building markets and establishing clearinghouses for producers and offtakers; however, it should not seek to immediately accumulate physical mineral stockpiles sufficient for years-long crises as its principal objective. Rather, it is the acquisition of advanced supply chain capabilities that will heavily determine whether the United States can establish global technology leadership in key sectors like artificial intelligence, advanced computing, aerospace, and next-generation energy technologies.

Key conclusions:

• Modern stockpiling is different from historical stockpiling. Stockpiling efforts in the present day face pressure to serve a wider set of contingencies and purposes—targeted export bans, economic disruptions, commodity dumping onto global markets—than past strategic stockpiling programs narrowly defined to meet military-industrial needs in the event of war.

• Most materials are not difficult to store. Industry already handles most supply chain commodities in practice as part of normal business operations. Aside from impractical commodities like ore concentrates and lithium brines and unique exceptions such as highly reactive neodymium-boron rare earth alloys, a stockpiling program could feasibly store most materials for years by adopting common industry precautions.

• Physical stockpiling may only rarely align with short-term national interests. Near-term efforts to stockpile a mineral ideally require uncommon alignment of three factors:

  • Adequate downstream industrial capacity for processing or using a stockpiled material.

  • Favorable market conditions for acquiring sufficient material at a reasonable price and without exacerbating supply shortages.

  • Opportunity to purchase materials from—and thereby protect—upstream domestic producers of that commodity.

• Ambitious physical stockpiles are a long-term project. As popularly imagined, a national physical stockpile sufficient to support strategically critical U.S. industries and the U.S. military through a crisis lasting years may require as long as a decade to accumulate, along with significant expenditures that would, arguably, be better spent on developing supply chain capabilities.

• The current national defense stockpile isn’t the answer. The NDS by its narrow statutory design does not have the flexibility or scale necessary to cover the needs of important U.S. economic sectors or to serve as a market actor that proactively buys and sells materials.

• Physical stockpiling would not be the primary benefit from a new national mineral reserve. The primary benefit of any new mineral reserve program would involve its role as a market actor for de-risking domestic mineral and processing projects through protections against dumping and price manipulation, rather than from the accumulation of physical reserves sufficient to, say, support the U.S. semiconductor or battery sectors through a period of crisis.

• The U.S. needs to build projects more than it needs to build stockpiles. Our analysis emphasizes how U.S. geologic resource constraints and supply chain bottlenecks in mining, processing, and manufacturing greatly complicate physical stockpiling efforts, highlighting the far higher importance of targeted industrial policy to fill gaps in domestic supply chain capabilities.

Recommended mineral supply chain stockpiling priorities:

Within all of the specific mineral supply chains analyzed, we identified the following commodities in each as the most theoretically suitable materials to prioritize, should a stockpiling program seek in principle to establish a physical reserve of that mineral:

• Aluminum: aluminum metal

• Cadmium: high-grade cadmium metal (99.999+%)

• Chromium: ferrochromium, chromium metal

• Cobalt: cobalt metal, cobalt sulfate

• Copper: refined copper metal

• Gallium: low-grade gallium metal (99.99%)

• Germanium: low-grade germanium metal (99.99%), germanium dioxide

• Graphite: natural graphite ore concentrate, synthetic graphite feedstock

• Lithium: hard rock lithium ore concentrates, lithium carbonate, lithium hydroxide

• Magnesium: magnesium metal, magnesium hydroxide

• Manganese: ferromanganese, silicomanganese, manganese sulfate

• Nickel: nickel sulfate, nickel metal, ferronickel

• Rare earth elements: hard rock ore concentrate, terbium oxide, dysprosium oxide, neodymium-praseodymium oxide

• Tellurium: high-grade tellurium metal (99.999+%)

• Zinc: zinc metal