| Lithium Included in Defense Stockpile for the First Time; US's Largest Lithium Mine Set to Launch—Is a Shift in Lithium Prices Coming? Critical minerals have evolved from mere commercial commodities into strategic resources, and the US strategy for stockpiling them is moving from policy planning to actual implementation. In February 2026, US President Trump announced the creation of a strategic critical mineral stockpile valued at $12 billion, aimed at boosting US industrial growth and reducing reliance on foreign trading partners. Dubbed "Project Vault," this initiative marks the first-ever critical mineral stockpile in US history, with Trump likening it to the nation's Strategic Petroleum Reserve. Trump emphasized that the stockpile's purpose is to foster industrial development; the US government has taken steps to ensure domestic access to all essential critical minerals and rare earths, highlighting investments in mining projects and the acceleration of federal permitting processes. In fact, lithium is not the first new-energy metal the US Defense Logistics Agency (DLA) has planned to acquire for strategic stockpiling. On August 19, 2025, the DLA announced plans to purchase 7,480 tons of cobalt; however, as cobalt prices surged 56% over the following two months and bidding companies could not commit to fixed prices for the next five years, the DLA was forced to cancel the cobalt procurement plan in October. Regarding lithium, the DLA had already issued a request for information in March concerning the potential purchase of 550 tons of lithium carbonate. Lithium's inclusion in the defense stockpile is inextricably linked to its strategic importance in the defense and energy sectors. From F-35 fighter jets to advanced chips, and from electric vehicles to grid-scale energy storage, lithium serves as a foundational material underpinning modern military and energy systems. After initiating plans to purchase lithium carbonate in March and conducting assessments throughout the second quarter, the DLA revised its strategy to a five-year plan to acquire 16,170 tons—a significant increase over the initial 550-ton target. The market had not anticipated US defense stockpiling of this nature; this move underscores the value of lithium carbonate as both a strategic and combat-readiness reserve. Regarding the market impact of the U.S. Department of Defense's lithium carbonate stockpile procurement plan: in terms of volume, the maximum amount is approximately 16,200 tons of lithium carbonate over five years—averaging about 3,200 tons of LCE (Lithium Carbonate Equivalent) annually—which breaks down to a monthly volume of just 200–300 tons. This scale is modest within the context of global lithium salt consumption and is significantly smaller than the market impact caused by demand fluctuations in the new energy vehicle and energy storage sectors. The author argues that this procurement should not be viewed as a source of incremental demand capable of directly altering the supply-demand balance; rather, the announcement is significant primarily for its policy implications. More precisely, it represents a "low-frequency, long-term, strategic procurement" with limited marginal impact on spot market fundamentals. "This event does not signal a sudden surge in lithium demand, but rather marks the transition of the U.S. critical mineral strategic reserve initiative from rhetoric to actual procurement execution." Analysts emphasize that the key factors moving forward are not the "announced dollar value," but rather whether contracts are actually awarded, who wins the bids, the transaction prices, and whether the scheduled annual deliveries are fulfilled. Based on the announced maximum value of $300 million, the implied maximum purchase price is approximately $18,600 per ton (or roughly 134,000 RMB per ton). While this figure does not represent the actual transaction price, it underscores the U.S. government's heightened emphasis on supply security, supplier qualifications, and long-term delivery reliability. Beyond strategic stockpiling of critical minerals, the U.S. Department of Defense has also shifted from a role of cooperation and capacity building to a more proactive strategic stance. Last September, the U.S. government agreed to acquire a stake in Lithium Americas Corp. to support the Canadian company's development of the Thacker Pass lithium project in Nevada—a project expected to become a major source for the domestic U.S. lithium industry. According to a report by *The Information* on June 22, the first phase of production at Thacker Pass—the largest known lithium deposit in the U.S.—is expected to launch late next year; at that point, its annual output will be ten times the current total U.S. lithium production. The U.S. government holds a 5% equity stake in Lithium Americas and a separate 5% interest in the Thacker Pass mine, while also providing financial backing through a $2.2 billion low-interest loan from the Department of Energy. Jon Evans, CEO of Lithium Americas, noted that this policy landscape has fundamentally altered the market dynamics: "The situation is completely different from last summer to this summer; we have become part of energy security policy." General Motors (GM) has secured the entire output from the mine's first phase for a 20-year period—enough to supply batteries for approximately 850,000 electric vehicles, or an equivalent amount for AI data centers, drones, robotics, and military equipment. The second phase of the Thacker Pass project aims to extract and process an additional 40,000 tons of lithium over the coming decade. GM has secured the right of first refusal for 38% of this phase's output and holds an option to acquire the remainder. However, even if lithium extraction capacity increases, the U.S. faces a significant hurdle in the refining stage, making it difficult to shake off reliance on overseas refining in the short term. As a researcher at the Atlantic Council’s Global Energy Center put it: "Lithium ore itself is useless; it must be refined to produce the lithium used in batteries." Raw lithium materials require processing and refining to be converted into the chemicals used for battery cathode materials and electrolyte solutions. In reality, achieving autonomy in the lithium-ion battery supply chain is far more complex than imagined. Industry data shows that U.S. lithium processing capacity accounts for only 1% of the global total, with over 75% of refining relying on China, creating a severe mismatch between domestic resources and processing capabilities. According to S&P Global, lithium refining capacity in the region is extremely limited; North Carolina is home to only two lithium refineries producing lithium hydroxide, with capacities of 15,000 tons and 5,000 tons, respectively. Regarding Thacker Pass, the largest U.S. lithium deposit, market anxiety also centers on a specific technical challenge: the lithium resources are embedded in clay layers, and the extraction process required to recover them has never been proven at a commercial scale. Even the CEO of Lithium Americas acknowledges that this uncertainty will continue to weigh on the company's valuation until actual production materializes. |
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