China Cuts Critical Mineral Supply to the U.S.

Recent reports indicate that China has sharply reduced its supply of essential minerals to the United States, highlighting its increasing focus on the American defense industrial supply chain. The Pentagon is pushing defense contractors to find alternatives to rare earth magnets sourced from China by 2027. However, as China restricts exports, manufacturers are already feeling the pinch. Some components have experienced price surges up to 60 times, and others are so specialized that relying on a single overseas supplier is not a feasible option for defense firms that need these minerals to produce items like guidance systems, drone parts, and radar chips.

Currently, China is responsible for roughly 60% of the world’s rare earth minerals and processes about 90% of the global supply, according to the International Energy Agency. This situation presents significant challenges.

Further complicating matters, a report from defense software company Govini states that over 80,000 components used in weapon systems are impacted by China’s export limitations. Almost every supply chain for vital minerals used by the Pentagon is dependent on at least one Chinese source.

Additionally, China dominates the lithium-ion battery market, which is crucial for all arms systems, producing over 80% of the world’s supply. These tensions create security risks, echoing earlier instances where supply chains were weaponized against allied nations.

As reported, China has restricted U.S. exports of antimony, germanium, and gallium, starting in December 2024. This has far-reaching implications for critical inputs used in soldiers’ equipment, night vision ammunition, and infrared sensors. Defense leaders caution that these restrictions could lead to production slowdowns unless resolved quickly.

As Duck Hardwick, vice president of international affairs at the Aerospace Industry Association, mentioned, “We discuss this every day, and it’s a constant topic in our company.” Drone manufacturers, in particular, find themselves at risk, given China’s control over the global drone market and related components. The integration of drones has reshaped modern warfare, and the U.S. is making significant efforts to deploy more advanced autonomous drones.

In response to these challenges, the Pentagon acquired a majority stake in MP Minerals back in July, which operates the only rare earth mine within the United States. The Department of Defense aims to assist the company in enhancing its refinement capabilities to mitigate dependence on foreign sources.

The U.S. Embassy in China has not commented on these developments.