The Aerospace Industries Association (AIA) has warned that the US Government’s plan to build a critical minerals stockpile could drive up prices and increase supply pressures for American manufacturers.
According to a Financial Times report, the industry group said government purchases of already-scarce minerals could create further price volatility and raise costs for major US aerospace and defence companies.
Earlier this year, the Trump administration launched a US$12 billion ($17.24 billion) initiative, known as Project Vault, to establish a strategic reserve of critical minerals that civilian manufacturers could access during supply disruptions.
The initiative, which includes a US$10 billion commitment from the US Export-Import Bank (EXIM), forms part of Washington’s broader efforts to reduce its reliance on China for critical mineral supplies.
However, the AIA believes government purchases of these minerals could create additional competition for private-sector buyers already operating with limited supplies.
The warning comes as prices for critical minerals such as tungsten and rare earths have already risen sharply following China’s restrictions on exports.
EXIM has maintained that Project Vault is designed to protect American manufacturers from supply shocks rather than compete with them.
However, the AIA is seeking greater clarity on how the program will operate before purchases begin.
“The US government should proceed with caution,” it said in a statement.
The AIA currently represents more than 300 leading US manufacturers and suppliers in the aerospace and defence sector.
China ban concerns
The association also raised concerns over an upcoming US ban on Chinese-sourced rare earth magnets for military applications, set to take effect in January 2027.
According to the AIA, the deadline would be difficult for defence manufacturers to meet, given the limited availability of alternative suppliers.
The group said companies would likely need exemptions beyond the deadline, as shifting supply chains away from China would take time.
“It would be very difficult for the industry to bear not having any waivers at all,” Dak Hardwick, AIA Vice-President of International Affairs, told FT.
Defence manufacturers often require high-purity minerals and specialised components that must undergo lengthy testing and qualification processes before they can be used.
The AIA also warned that a large number of exemption requests could create administrative bottlenecks, particularly after President Donald Trump issued an executive order in July restricting future waivers.
Write to Jackson Chen at Mining.com.au
Main image: Aerospace Industries Association
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