Assessing the $70 Billion Push: Can U.S. Critical Minerals Policy Sustain a Commodity Cycle?

A significant macro policy shift is now underway, aiming to reshape the commodity cycle for critical minerals. This is not a minor adjustment but a major, bipartisan intervention designed to reduce reliance on China and stabilize supply. The centerpiece is a legislative push to reauthorize the United States Export-Import Bank (Ex-Im Bank) for the next decade, with lawmakers planning to inject an extra $70 billion into the agency to support President Trump's critical minerals agenda. The bipartisan sponsorship, led by Republican Senator Kevin Cramer and Democrat Mark Warner, underscores a rare consensus on national security and economic resilience.

This funding surge is being channeled into a concrete, strategic initiative: Project Vault. Announced by the President, this is a $12 billion strategic reserve aimed at insulating U.S. manufacturers from supply shocks. Modeled after the Strategic Petroleum Reserve, Project Vault will store essential raw materials to shield industries from disruptions, as seen during last year's trade standoff when China restricted rare earth exports. The initial funding for this reserve comes from a $10 billion loan from the Ex-Im Bank, with additional private capital, and the project is structured to deliver a net positive return for taxpayers.

This policy is part of a broader, multi-pronged strategy. It follows a January executive order that explicitly targets the vulnerability of U.S. import dependence on 41 critical minerals, noting that the country is fully import-dependent for 12 of them. The order focuses on securing processed minerals through international cooperation, mirroring China's own playbook of leveraging allies. The goal is to build a more resilient supply chain by diversifying sources and incentivizing downstream processing capacity abroad. Together, the $70 billion funding, the $12 billion reserve, and the diplomatic push represent a concerted effort to break China's chokehold and anchor a new, more secure commodity cycle.

Market Reaction and the Cyclical Context

The market's reaction to this policy catalyst has been explosive, pricing in a multi-year cycle of supply constraints and strategic importance. The VanEck Rare Earth and Strategic Metals ETF is up a staggering 146% since the market's bottom in April 2025. This isn't just a short-term pop; it's a sustained rally that has already delivered a 13% gain this year. The move suggests investors are betting the current geopolitical push will fundamentally re-rate the sector, moving it from a cyclical commodity play to a strategic asset class with durable tailwinds.

Yet this powerful momentum also raises immediate questions about valuation and speculative excess. The surge has been so rapid that it has fueled a wave of high-profile, pre-revenue plays. Take Critical Metals Corp., whose stock soared 89.8% in January on news like a Greenland project approval and a Saudi processing JV. The company now trades at a market cap over $1.5 billion despite having virtually no revenue yet. This kind of speculative fervor is a classic sign of a market in the late innings of a cyclical rally, where sentiment can temporarily push prices beyond fundamental support.

Viewed through a macro cycle lens, the policy shift is a powerful demand-side shock designed to break a long-standing supply-side oligopoly. The market is correctly pricing in a structural reconfiguration, but the speed of the repricing suggests it may be ahead of the actual supply response. The cycle's sustainability will depend on whether this policy can translate into the physical capacity and investment needed to meet the projected demand, or if it simply creates a frothy bubble of anticipation. The key development broadening the strategic focus is the U.S. Geological Survey's update to its critical minerals list. The agency is revamping its assessment to include silver and copper for the first time since 2018. This expansion signals a recognition that the strategic vulnerability extends beyond rare earths to other foundational metals critical for electrification. It could eventually anchor a broader commodity cycle, but for now, the market's focus-and-the policy's initial funding-remains laser-focused on the rare earths chokepoint. The bottom line is that the market is pricing in a new cycle, but the path from policy promise to sustained, profitable supply is where the real test begins.

The Execution Challenge and Macro Dependencies

The policy's ambitious design now faces a critical test of execution. Its success hinges on the Ex-Im Bank's ability to deploy the promised capital and secure the international partnerships that are central to the strategy. Senators are pushing to lift the bank's lending cap from $135 billion to $205 billion as part of the reauthorization. This expansion is meant to provide the financial firepower to back U.S. projects and incentivize foreign processing capacity. Yet, translating this legislative promise into on-the-ground deals is fraught with complexity. The bank must navigate sovereign risk, ensure project viability, and compete with established financing models, all while the clock is ticking on supply chain vulnerabilities.

The broader commodity cycle, however, remains tethered to powerful macro forces that can temporarily override even the most strategic policy. Real interest rates, the strength of the U.S. dollar, and global growth trends are the fundamental drivers of commodity prices. A shift in monetary policy toward higher-for-longer rates or a stronger dollar could dampen demand and investor appetite for risk assets, including these strategic metals, regardless of the policy tailwinds. This creates a dual dependency: the sector needs the policy to reconfigure supply, but its price action will be dictated by the broader financial cycle.

The most persistent uncertainty is whether the reserve and partnerships can effectively counter China's dominant processing capacity. Beijing's control over 40-90% of global refining for key materials like lithium, cobalt, and copper is the result of decades of deliberate industrial policy. The U.S. strategy of building alliances and offering incentives is a direct response, but it is a long-term project. In the near term, the market's optimism may outpace the physical reality of building new, cost-competitive refining capacity abroad. The $12 billion strategic reserve is a useful buffer against shocks, but it does not solve the core problem of downstream processing. The bottom line is that policy provides a powerful demand-side anchor, but the cycle's sustainability depends on whether execution can keep pace with the market's elevated expectations.

Catalysts and Watchpoints for the Cycle

The policy-driven bullish thesis now faces a series of near-term tests. The primary catalyst is the legislative push itself. Senators are set to introduce the reauthorization bill this week, aiming to secure the $70 billion in new funding and lift the Ex-Im Bank's lending cap. The speed and final terms of this legislation will be a key early signal. A swift, bipartisan passage would validate the political consensus and provide immediate capital to back the strategy. Delays or compromises could introduce uncertainty, potentially dampening market momentum.

The execution of the flagship Project Vault will be the next major watchpoint. The reserve's initial $10 billion loan from the Ex-Im Bank is a concrete first step, but the real test is the rollout. The announcement of the 11 additional countries joining the initiative later this week is a critical early metric. It will gauge the speed and depth of international buy-in. The subsequent signing of bilateral agreements at the State Department meeting will provide a clearer picture of the tangible supply chain diversification underway. The market will be watching for evidence that this is moving from announcement to binding partnership.

Beyond the policy specifics, the broader macro backdrop remains a powerful, independent variable. Shifts in the U.S. dollar and real interest rates are primary drivers of commodity price cycles. A stronger dollar or higher real yields could dampen demand and investor appetite for risk assets, including strategic metals, regardless of the policy tailwinds. Conversely, a weaker dollar or easing financial conditions could amplify the policy effect. Investors must monitor these macro forces as they will define the actual price environment in which the new supply chains operate.

The bottom line is that the cycle's sustainability hinges on a dual track. On one side, the policy must deliver tangible results through legislation and partnership announcements. On the other, the macro environment must remain supportive. The coming weeks will provide the first concrete data points to assess whether the bullish thesis is being confirmed by execution or challenged by external headwinds.