Critical Minerals Reckoning: Can FORGE Break China's Rare Earth Grip?

The February 2026 Critical Minerals Ministerial in Washington, D.C., convened 54 nations for what experts call the most ambitious coordinated Western response to date against China's stranglehold on rare earth supply chains. The centerpiece of this effort is FORGE (Forum on Resource Geostrategic Engagement), a plurilateral coalition that introduces coordinated price floors and bilateral supply agreements for critical minerals. Simultaneously, the U.S. Export-Import Bank launched Project Vault, a $12 billion public-private partnership to establish a Strategic Critical Minerals Reserve. But can these initiatives meaningfully challenge China's dominance—which controls roughly 70% of global rare earth production and up to 90% of processing capacity—or will structural dependence persist for decades?

China's Unrivaled Grip on Rare Earths

China's dominance in the rare earth industry is the result of decades of strategic state investment. According to the U.S. Geological Survey's February 2026 Mineral Commodity Summaries, China holds 44 million tonnes of rare earth oxide reserves—the world's largest. The International Energy Agency estimates that China accounted for about 91% of global separation and refining production and 94% of sintered permanent magnet production in 2024. A 2026 patent landscape report found that China accounts for 81% of rare-earth-related patent filings globally between 2014 and 2024.

China has leveraged this dominance aggressively. In 2025, it imposed two waves of export controls on rare earth elements and related technologies, triggering sixfold price spikes and licensing approval rates below 25% for European firms. Over 80% of European companies depend on Chinese supply chains for critical minerals essential to defense, EVs, and electronics. The 2025 rare earth export controls forced some U.S. manufacturers to cut production, underscoring the vulnerability of Western supply chains.

FORGE: A New Plurilateral Approach

FORGE, announced by Secretary of State Marco Rubio at the February 4, 2026 Ministerial, succeeds the Minerals Security Partnership (MSP). Unlike the MSP's project-by-project approach, FORGE creates a preferential trade-and-investment zone for critical minerals with coordinated price floors designed to counter adversarial market manipulation. Vice President JD Vance announced reference prices for critical minerals that will operate as price floors maintained through adjustable tariffs.

The administration has signed 21 bilateral critical minerals framework agreements in five months, including with Argentina, Morocco, Peru, and the United Kingdom. Seventeen more countries are reportedly completing negotiations. South Korea will chair FORGE through June 2026. The coalition aims to cover two-thirds of the global economy, linking disparate bilateral deals into a functioning plurilateral system. Over $30 billion in U.S. government financing support has been mobilized for strategic minerals projects over the past six months.

According to the Atlantic Council, FORGE represents a shift from purely bilateral approaches toward plurilateral coordination, aiming to reshape critical minerals markets through collaborative statecraft rather than unilateral actions. However, the Minerals Security Partnership limitations highlight the challenges of translating ambitious frameworks into operational reality.

Project Vault: A $12 Billion Strategic Reserve

Project Vault, announced by President Trump on February 2, 2026, is a $12 billion public-private initiative ($10 billion from EXIM plus $2 billion in private seed funding) to establish the U.S. Strategic Critical Minerals Reserve. Unlike the Strategic Petroleum Reserve, Project Vault acts as insurance against systemwide supply shocks. Companies including General Motors, Boeing, Stellantis, and Google have joined. Firms will commit to buying materials at fixed prices, pay upfront fees and carrying costs, and can access stored minerals during supply disruptions as long as they replace what they use.

The reserve will store essential raw materials—including rare earths, gallium, and cobalt—in secure facilities across the U.S. EXIM Chairman Jovanovic promoted the project at CSIS, on CNBC and Bloomberg, and at the Critical Minerals Ministerial. Supportive statements came from Boeing, GE Vernova, and Clarios, emphasizing enhanced national security and economic competitiveness.

However, a policy brief by the Peterson Institute for International Economics (PIIE) raises concerns. Voluntary participation would exclude large self-insuring firms and unaware small enterprises, hollowing out the risk pool. Storing 60 differentiated minerals and processed derivatives is more complex than oil stockpiling due to degradation and processing needs. Critically, near-term reserves would likely depend on Chinese suppliers, given that Western rare earth processing capacity remains negligible.

Can the West Catch Up?

The structural challenges are immense. While the U.S. and Australia are the second and third-largest producers with 13.1% and 7.4% shares respectively, both lack commercial-scale refining capability. Global production reached an estimated 390,000 tonnes of rare earth oxide in 2025, a modest 2.6% increase over 2024. China is expected to retain its leading position across the entire value chain—from mining to magnet manufacturing—keeping the market highly competitive.

China has also introduced automatized real-time controls and penalties in the rare earth industry in 2026, further tightening its grip. The country's state-owned enterprises benefit from decades of infrastructure investment, intellectual capital development, and strategic policy tools like the export rebate system that provided up to 17% tax credits for rare earth products.

Experts remain divided. Some argue that FORGE's coordinated price floors and Project Vault's strategic reserve could create a parallel market that gradually reduces dependence. Others contend that without massive investment in domestic processing capacity—which takes 10-15 years to build—Western initiatives will remain dependent on Chinese supply chains for the foreseeable future.

Expert Perspectives

"FORGE represents the most serious attempt yet to create a rules-based alternative to China's state-controlled market," said a senior State Department official speaking on condition of anonymity. "By coordinating price floors and pooling demand, we can offer producers a viable alternative to selling exclusively to China."

However, Cullen S. Hendrix of PIIE warns: "Project Vault's voluntary design risks creating a reserve that is both too small and too dependent on Chinese supply. Mandatory participation and a focus on processed materials would be more effective."

The geopolitical implications of rare earth dependency extend beyond economics. China's export controls in 2025 demonstrated that it is willing to weaponize its market position. The question is whether FORGE and Project Vault can build enough resilience before the next crisis.

FAQ

What is FORGE?

FORGE (Forum on Resource Geostrategic Engagement) is a plurilateral coalition launched in February 2026 to coordinate critical minerals policy among allied nations, including coordinated price floors and bilateral supply agreements to counter China's dominance.

What is Project Vault?

Project Vault is a $12 billion public-private initiative to establish a U.S. Strategic Critical Minerals Reserve, storing rare earths, gallium, cobalt, and other minerals for use during supply disruptions.

How much of the rare earth market does China control?

China controls roughly 70% of global rare earth production and up to 90% of processing capacity, including 91% of separation and refining and 94% of permanent magnet production.

Can the West reduce dependence on China for rare earths?

It will take 10-15 years and tens of billions in investment to build competitive Western processing capacity. FORGE and Project Vault are initial steps, but structural dependence is likely to persist for at least a decade.

What triggered the 2026 Critical Minerals Ministerial?

China's 2025 export controls on rare earths, which caused sixfold price spikes and disrupted Western manufacturers, prompted the U.S. to convene 54 nations for the most coordinated response to date.

Conclusion

The February 2026 Critical Minerals Ministerial and the launch of FORGE represent a pivotal moment for global supply chain security. While the coordinated Western response is unprecedented in scale and ambition, China's decades-long head start in building its rare earth industry means that structural dependence will not be overcome quickly. The success of FORGE and Project Vault will depend on sustained political will, massive capital investment, and the ability to translate bilateral agreements into a functioning plurilateral system. For now, the West has drawn a line in the sand—but the battle for critical mineral independence is only just beginning.

Sources

• U.S. State Department: 2026 Critical Minerals Ministerial
• Atlantic Council: US Critical Minerals Policy Goes Collaborative with FORGE
• Export-Import Bank: Project Vault Announcement
• PIIE: Strengthening Project Vault
• CNBC: US Allies Unveil Critical Minerals Price Floors
• Mining Technology: China's Rare Earth Dominance 2025