China’s mineral export ban disrupts US defense supply chain
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China’s export restrictions on rare earths delay US weapons systems, drive up costs, and expose the Pentagon’s reliance on Chinese critical minerals.
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A mine operated by Serra Verde Mining in Minacu, Goias state, Brazil, Monday, July 28, 2025 (AP)
China’s escalating restrictions on critical mineral exports are causing widespread disruptions across the US defense industry, with some weapons manufacturers reporting months-long delays in production and soaring material costs, The Wall Street Journal reported.
According to industry officials and government data cited by WSJ, Beijing has intensified its grip on rare earth elements and other vital materials used in everything from night-vision goggles and jet fighter engines to satellite components and drone motors. Although exports briefly resumed following trade concessions from the Trump administration in June, China continues to enforce sweeping controls, particularly on shipments destined for military use.
“Some drone manufacturers supplying the Pentagon have already been forced to delay deliveries by up to two months while searching for alternative suppliers,” said Dak Hardwick of the Aerospace Industries Association.
One US-based drone propulsion company, ePropelled, was asked by its Chinese magnet supplier to provide product drawings, buyer lists, and proof that its rare-earth magnets would not be used for defense purposes. The company refused to comply and saw shipments halted, which culminated in dozens of American and Ukrainian defense clients being impacted.
Soaring prices and shrinking stockpiles
With China producing around 90% of the world’s rare earths, the price of some materials has surged. One supplier was offered the critical magnet metal samarium at 60 times its normal rate, as per The Wall Street Journal. Other elements, such as germanium and antimony, essential for infrared sensors and bullet hardening, are also under export bans imposed by Beijing since late 2024.
“We’re down to our safety stock,” said Bill Lynn, CEO of Leonardo DRS, a key defense contractor for infrared systems. “We need improved material flow in the second half of 2025.”
Even major defense contractors like Lockheed Martin are feeling the pressure. The Pentagon recently agreed to pay $400 million for a stake in MP Materials, operator of the largest rare-earth mine in the Western Hemisphere, to accelerate domestic magnet production for the F-35 and other advanced weapons systems. But such efforts won’t bear fruit for at least another year.
Defense firms scramble to localize supply
The crisis is prompting defense companies to bypass traditional suppliers and secure their own mineral sources. Startups like Phoenix Tailings in Massachusetts and USA Rare Earth in Oklahoma are seeing a surge in demand, though most won’t have production capacity ready until late 2025.
“They’re just not going to get the magnets unless they get involved directly,” said Phoenix Tailings CEO Nicholas Myers.
The Department of Defense has launched a Critical Minerals Forum to support these efforts, funneling millions in grants to North American producers and exploring partnerships with allied nations to develop alternative supply routes.
But industry experts warn the shift will take years. One recent incident underscored the seriousness of China’s enforcement: in April, Chinese customs detained a US-bound shipment of antimony, mined in Australia and transiting through Ningbo, for three months. The shipment was eventually released on the condition that it not proceed to the US, and the product seals were later discovered to be broken.
“Nobody had seen this happen before,” said Gary Evans, CEO of United States Antimony Corporation. “We still don’t know if the shipment was tampered with.”
Strategic implications for the Pentagon
According to data from defense analytics firm Govini, more than 80,000 components in US weapons systems depend on critical minerals now restricted by China. In nearly every supply chain reviewed, at least one Chinese supplier plays a role, making Washington’s efforts to decouple from Beijing’s mineral monopoly both urgent and costly.
The Pentagon has mandated that defense contractors stop sourcing rare-earth magnets from China by 2027, but many firms hold just a few months’ worth of inventory. Smaller defense startups are particularly vulnerable, lacking the stockpiles or financial resources to weather prolonged supply disruptions.
Foreign Policy (FP) reported in early July that China is set to greenlight a new agreement allowing rare earth exports to the United States, marking a potential turning point in a tense area of US-China economic relations. The move followed rounds of diplomatic engagement in Geneva and London earlier this year and amid growing concern in Washington over China's dominance in critical mineral supply chains.
Strategic mineral stalemate
While China was investing in industrial capacity, scientific research, and infrastructure, the US was allowing its supply chain to atrophy. Despite repeated warnings from experts, Washington allowed key facilities like the Mountain Pass mine to fall into disrepair. Even after China temporarily restricted exports to Japan in 2010, a sovereign decision amid a geopolitical dispute, the US failed to rebuild its capabilities in any meaningful way. Fifteen years later, Mountain Pass remains the only rare earth production site in the US, and it still depends on Chinese processing.
Trump's attempts to revive the industry were poorly executed and lacked a coherent strategy. His second-term priorities, focused more on deregulating fossil fuels than investing in strategic industries, have done little to address America's rare earth dependence, according to FP. In contrast, China has continued to improve its domestic sector while maintaining responsible control over exports to ensure global market stability.
On that note, China's rare earth policy is not only industrial, but it is also protective of national intellectual resources. As The Wall Street Journal recently noted, Beijing is implementing tighter internal measures to safeguard technological knowledge, including monitoring rare earth experts and controlling travel. These steps are rational in a world where technology transfer often leads to exploitation and unfair competition.
According to FP, this latest export agreement should not be mistaken for China caving to pressure. Rather, it reflects a position of strength: China is choosing cooperation while remaining the undisputed leader in the rare earth sector. The US, for its part, has once again been forced to return to the negotiating table due to its strategic shortcomings.
