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THIS GLOBAL POWER GRAB COULD DECIDE WHO WINS AI

In the world of Dune, the entire universe runs on one thing: Spice.

It is the only way to navigate the stars and the secret to long life.

For eighty years, the cruel House Harkonnen controlled the mining of Arrakis, growing obscenely wealthy while the rest of the world stayed addicted to their supply.

But the Emperor saw the rising popularity of the noble House Atreides as a threat.

He set a trap, abruptly handing the desert to the Atreides, not as a gift, but as a death sentence designed to trigger a brutal betrayal and a war for the throne.

Source: Giphy

In 2026, our "Spice" isn't a drug; it’s critical minerals.

And for thirty years, we’ve let a modern-day House Harkonnen, aka China, own the harvest.

While we followed the rules of a global free market, Xi Jinping was busy mastering desert power.

They now control 92% of global rare earth processing, creating a “kill switch" for the 21st-century economy.

Source: @MarioNawfal

But the U.S. and its 54 allies decided to spring their own trap.

They call it FORGE, the Forum on Resource Geostrategic Engagement.

It was too risky for one person to fund alone.

So, they invented something new: the Preferential Trade Zone

Members of the zone agree to trade only with each other under a specific set of rules that protect them from outside predators.

In Washington, Vice President JD Vance laid out the primary rule of this new club: price floors.

"We want to eliminate that problem of people flooding into our markets with cheap critical minerals to undercut our domestic manufacturers", Vance told the ministers.

He explained that for members of this preferential zone, reference prices will operate as a floor.

These floors are maintained through adjustable tariffs to uphold pricing integrity.

Think of a price floor like a safety net.

In a normal market, prices can drop all the way to the ground.

If a competitor floods the market with super-cheap minerals, the price crashes.

When the price is too low, it is not worth it for American companies to dig or refine minerals.

They would lose money on every pound.

So, they go out of business.

This leaves the predator as the only shop in town.

This ensures domestic mines stay profitable no matter what outside forces do.

While the trade negotiators are busy building the shield, the administration is also building the sword.

President Trump announced Project Vault, a $12B strategic stockpile for minerals.

Source: Google

Think of it like the Strategic Petroleum Reserve, but for the AI age.

Backed by a $10B direct loan from the U.S. EXIM Bank and nearly $1.67B in private capital, the goal is to provide a 60-day emergency supply of essential materials.

The U.S. government is now mobilizing over $30B in total support.

This includes a $1.3B loan for the Reko Diq mine in Pakistan to secure copper and gold.

Crucially, silver, copper, and uranium were recently added to the 2025 USGS Critical Minerals List.

This allows them to be designated as strategic national assets for the first time in modern history.

Over a dozen major firms have already signed on as participants.

This includes Google, Boeing, Lockheed Martin, and General Motors.

By committing to purchase materials at predetermined prices, these giants are providing the demand commitment.

This serves as collateral for the massive federal loans.

But this isn't just a financial play or a pile of rocks for a rainy day.

The reason the world's most powerful tech and defense companies are rushing to sign these deals is that they've realized a fundamental truth about the future of intelligence.

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THIS GLOBAL POWER GRAB COULD DECIDE WHO WINS AI (P2)

You’ve heard us say that algorithms are the brain of AI.

But minerals are the physical body.

None of the cool software we talk about every day exists without the physical stuff that makes it run.

Training a single high-end AI model requires thousands of GPUs.

Think of these chips like high-performance engines.

Those engines depend on gallium for power efficiency and germanium for high-speed data transmission.

Since one country currently controls nearly all global gallium refining, any export restriction is a direct attack on Silicon Valley.

Source: @Globalstats11

This mineral chokepoint strangled the production lines for the next generation of GPT or Claude.

AI data centers are massive energy hogs.

They rely on copper for the "nervous system" of wiring and cooling systems.

They also need rare earth elements to prevent storage devices from overheating.

As physical AI like Tesla’s Optimus Gen 3 robots and Waymo’s driverless fleets scale into mass production, the demand for these minerals is hitting an exponential curve.

To put that demand in perspective, a typical electric vehicle requires six times the mineral inputs of a conventional car.

While a conventional gas car uses about 33 kg of minerals, an EV requires over 200 kg.

An EV uses roughly 53 kg of copper, double the weight found in internal combustion vehicles.

Beyond copper, ingredients like lithium, nickel, cobalt, manganese, and graphite are crucial for battery performance, while rare earth elements are essential for the permanent magnets in EV motors.

Source: @WealthEnrich

How the shield and sword work together

You might be wondering: How do a bunch of trade deals (FORGE) and a giant pile of rocks (Project Vault) actually work as one?

It is all about market gravity.

For years, foreign subsidies acted like a magnet.

They pulled prices so low that Western mining companies simply floated away into bankruptcy.

Project Vault provides the physical floor.

By signing forward purchase commitments, giant companies like Alphabet (Google) are essentially saying:

"We will buy this cobalt at $X price, no matter what."

This gives banks the confidence to lend money to new mines.

They know a buyer already exists at a profitable price.

FORGE provides the legal wall.

It coordinates 54 other countries so they don't go behind our backs to buy cheap minerals from the predator the moment prices get high.

Together, they create a protected zone.

The price is set by what it actually costs to build things in the West.

This is better than whatever price an adversary sets to kill the competition.

Why everyone is sweating

Intervening in the market like this isn't free.

The consequences of these price floors will ripple through the entire global economy.

And it is going to get messy.

For the last decade, tech giants have lived in a world where global supply meant whatever was cheapest on the screen.

That world is officially in the rearview mirror.

Manufacturers are losing the spot price (the right now price for immediate delivery) game.

Companies like Tesla and Apple have historically thrived by scooping up battery materials at the lowest possible global spot prices.

They did this to maximize their margins.

These new price floors essentially act as a mandatory premium on manufacturing.

It makes it impossible to buy at the artificially depressed prices offered by subsidized foreign competitors.

To ensure a stable, domestic supply, Western companies must now pay a higher, government-mandated baseline.

This prioritizes supply chain security over short-term savings.

The days of riding on the back of cheap, state-subsidized minerals are effectively over.

This applies to any company wanting to stay in the Shield’s good grace.

Why I remain skeptical for now

I love the empire energy of building a 54-nation alliance to fight a monopoly.

It is peak main-character energy.

But here is the contrarian truth: Cartels are hard.

For FORGE to work, the U.S. needs dozens of allies to agree to pay higher prices.

They must pay more for minerals than they would on the open market.

If a key partner like South Korea or the EU decides they’d rather buy "off the books" from the predator to save a few billion, the whole shield cracks.

At the end of the day, you can't just wish a supply chain into existence.

The U.S. is currently playing catch-up.

It is a game that others have been mastering for thirty years.

While the new price floors might protect our fortress, we’re finding out that the price of security is a very expensive monthly subscription.

Alright, that’s it for this edition of Milk Road AI.

We want to hear from you.

Are price floors the right move?