The increasing restrictions from China on the export of rare earth minerals pose a significant threat to the United States defense supply chain. During a recent conference, Greg Hayes, CEO of Raytheon, emphasized that the U.S. military’s dependence on materials sourced from or processed in China effectively places the supply chain at Beijing’s mercy. Hayes pointed out that Raytheon relies on “several thousand suppliers in China,” highlighting the scale of U.S.-China trade, which amounts to approximately $500 billion annually.
In response to rising trade tensions earlier this year, China tightened its control over the export of critical minerals, including rare earth elements essential for military applications. Although shipments resumed following trade concessions made by the Trump administration in June, China’s dominance is clear, as it accounts for roughly 90 percent of global rare earth output. These minerals are vital for manufacturing components such as bullet hardeners and night-vision optics.
The situation is becoming increasingly urgent. Bill Lynn, CEO of Leonardo DRS, reported that his company’s supply of germanium—a metal crucial for infrared sensors in missiles—has dwindled to “safety stock” levels. “To sustain timely product deliveries, material flow must improve in the second half of 2025,” he stated during an investor call. The U.S. subsidiary of Italy’s Leonardo is actively seeking alternative suppliers and potential substitutes.
Manufacturers of drone parts for the U.S. military are also feeling the effects. Some have postponed orders by as much as two months while searching for non-Chinese sources of magnets, which are derived from rare earth elements. Reports indicate that the price of samarium, a metal used in high-temperature magnets for jet engines, has surged to 60 times its typical cost. In a strategic move, the Pentagon has directed defense contractors to eliminate magnets containing Chinese minerals by 2027. While some companies have stockpiled magnets, the majority maintain only limited supplies of other critical materials.
Small drone manufacturers, especially startups with constrained resources, face heightened vulnerability. Dak Hardwick, Vice President of International Affairs at the Aerospace Industries Association, noted that the challenges posed by reliance on Chinese minerals are frequently discussed within the industry. A recent analysis from defense software firm Govini revealed that nearly all U.S. defense supply chains depend on at least one Chinese source.
Furthermore, Western companies report that Chinese authorities are now demanding detailed disclosures—including images of products and production lines—before granting approval for shipments. Chris Thompson, Vice President of Global Sales at a defense firm, stated, “Of course we are not going to provide the Chinese government with that information.” The company’s refusal led to shipment delays, with delivery times extending to twice their normal duration. In response, the firm has begun sourcing from suppliers in the United States, Europe, Japan, and Taiwan, as well as emerging producers like Vulcan Elements in North Carolina and USA Rare Earth in Oklahoma. However, these new sources are not expected to begin delivery until later this year and will need to establish their own non-Chinese supply chains.
Recognizing the urgency, Washington is beginning to take action. Lockheed Martin, which has the largest rare-earth mine in the Americas, is seeking to secure supplies of necessary minerals. CEO James Taiclet described a recent deal with MP Materials as “groundbreaking” for obtaining magnets essential for F-35 fighters and cruise missiles. Nicholas Myers, CEO of Massachusetts-based Phoenix Tailings, remarked that major defense companies are now actively working to secure their own mineral supplies.
Earlier this year, the United States Antimony Corporation attempted to ship 55 metric tons of antimony mined in Australia to its Mexican smelter via the Chinese port of Ningbo. Despite having successfully completed similar shipments in the past, Chinese customs officials held the cargo for three months, eventually releasing it only under the condition that it be returned to Australia. Upon its arrival, CEO Gary Evans noted that the seals had been broken.
As these supply chain challenges intensify, the implications for the U.S. defense sector are profound. The reliance on Chinese mineral sources is forcing companies to rethink their strategies, with the urgency for securing alternative supply routes becoming increasingly critical.
