Summary of the GAO Report on Critical Materials and Rare Earths–US DoD Concerns

Highlights

• Over 95% of rare earths consumed in the U.S. are imported, primarily from China, posing significant national security supply chain risks.
• The Department of Defense (DOD) is funding projects to rebuild domestic rare earth mining and processing capacity, allocating $439 million since 2020.
• Comprehensive policies and increased domestic capabilities are critical for long-term security and resilience against supply chain disruptions.

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In September of 2024 the U.S. Government Accountability Office (GAO) issued a report titled ”Critical Materials: Action Needed to Implement Requirements That Reduce Supply Chain Risks (opens in a new tab).”  In this paper the GAO reports that the Department of Defense (DOD) identifies rare earth elements and other critical materials, like tantalum and tungsten, as essential to national security due to their unique properties and uses in weapon systems. However, DOD faces significant risks from supply chain dependence on foreign sources, particularly China, which dominates global mining and processing of these materials.  Rare Earth Exchanges has explained that China’s dominance is in fact part of a three phased plan for ubiquitous economic dominance by the year 2049.

What were the U.S. government’s key findings?

Frist when it comes to supply chain vulnerabilities the U.S. has a problem.  Over 95% of rare earths and a substantial share of tantalum and tungsten consumed in the U.S. are imported, primarily from China. This dependency poses risks of supply chain disruption by adversarial nations.

So, what can be done about this?

From a legislative and procurement measure perspective, recent NDAA provisions require DOD to enhance transparency and restrict procurement of rare earths and critical materials from adversarial nations, including China, Iran, North Korea, and Russia.

DOD is updating acquisition regulations to implement these restrictions, with key provisions taking effect by 2027.

What about National Defense Stockpile (NDS) Management?

The NDS holds reserves of critical materials but lacks clear policies to prevent sales to adversarial nations.  Existing sales procedures rely heavily on buyer self-attestation, raising concerns about potential sales to entities linked to adversaries.

But remember even with access to the raw material, most countries are dependent on Chinese processing.

Are there mitigation measures available?

Well, DOD has funded projects to rebuild domestic rare earth mining and processing capacity, allocating $439 million since 2020. It is also developing strategies to diversify supply chains and strengthen partnerships with allies.

Rare Earth Exchanges suggests these are moving not nearly fast enough.

What recommendations does the government make?

The DOD suggests the strengthening of sales policies**.**  The report recommends that DOD establish policies and criteria to prevent the sale of NDS materials to adversaries or their proxies.

They also recommend the enhancement of oversight. Meaning improved  mechanisms are needed to verify buyer affiliations and ensure compliance with national interests.

Conclusion

While DOD is taking steps to mitigate supply chain risks and reduce foreign dependence, delays in implementing statutory requirements leave the U.S. vulnerable. Comprehensive policies and increased domestic capabilities are critical for long-term security and resilience.

Key players at GAO, at least for now include:

W. William Russell, Director, Contracting and National Security Acquisitions, and Sarah Kaczmarek, Acting Managing Director, Public Affairs.

Source: See the GAO for the source. (opens in a new tab)