America's Nuclear Deterrent Runs Through China's Rare Earth Supply Chain

Highlights

• The U.S. Navy's Columbia-class submarine relies on rare earth magnets for propulsion, sonar, and missile guidance—materials still overwhelmingly processed in China.
• War on the Rocks correctly calls for government-backed offtake agreements and loan guarantees, but financing alone cannot rebuild a dismantled industrial base.
• Rare Earth Exchanges argues the U.S. needs a coordinated industrial ecosystem covering separation, metallization, alloy production, magnet manufacturing, and recycling.
• Success must be measured by commercial-scale facilities operating at sustained economic output—not by funding announcements or new company formations.

War on the Rocks (opens in a new tab) gets the problem right—but the solution requires far more than financing. The U.S. Navy's next-generation Columbia-class ballistic missile submarine (opens in a new tab) depends on rare earth elements that are still overwhelmingly processed in China. A new War on the Rocks commentary correctly identifies this as one of America's most consequential national security vulnerabilities and argues that government-backed offtake agreements, loan guarantees, and procurement commitments are needed to stimulate domestic investment. The Rare Earth Exchanges® assessment: the diagnosis is largely correct, but the prescription is incomplete. America does not simply need more financing for more companies big or small—it needs a coordinated industrial strategy that rebuilds the entire rare earth value chain, from separation and metallization to alloys, magnets, recycling, and shared industrial infrastructure.

America's Quietest Submarine Reveals Its Loudest Strategic Weakness

The world's most advanced submarine cannot escape the laws of industrial economics.

That is the central message of a compelling new War on the Rocks essay examining the U.S. Navy's dependence on Chinese rare earth processing for the Columbia-class ballistic missile submarine. Beneath the discussion of stealth, propulsion, and deterrence lies a far more important story: America still lacks the industrial base required to produce many of the materials its most sophisticated weapons depend upon.

A Strong Diagnosis of the Strategic Problem

The article, authored by Ryan Musto, an investor at Alumni Ventures, accurately explains that permanent magnets containing neodymium, dysprosium, terbium, and samarium are essential for electric propulsion, sonar systems, vibration control, and missile guidance. It also correctly highlights China's overwhelming dominance in rare earth separation and heavy rare earth processing—arguably the most critical chokepoint in the global supply chain.

The author's call for stronger government demand signals through long-term offtake agreements, procurement commitments, and loan guarantees is well grounded. Stable demand is a prerequisite for attracting long-term private capital into strategic industries.

The Missing Industrial Strategy

Where the analysis falls short is in assuming that financing is the principal constraint.

Capital alone does not build solvent extraction facilities, metallization plants, alloy production, magnet manufacturing, specialized workforces, or integrated logistics networks. Nor does it solve permitting challenges, feedstock security, or the absence of shared industrial infrastructure.

Rare Earth Exchanges has consistently argued that rebuilding competitiveness requires an integrated industrial ecosystem—not a collection of individually subsidized companies—whether they be emerging conglomerates or startups.

The Investor Takeaway

This essay is an important contribution to the national security debate, and its core factual foundation is largely sound. But investors should distinguish between financing projects and rebuilding industries. The West's competitive challenge is not merely to produce more rare earth materials. It is to reconstruct an entire industrial supply chain capable of competing with China's vertically integrated model. That success will ultimately be measured not by announcements or funding rounds, new companies, or the like, but by commercial-scale separation plants, metallization facilities, alloy production, and permanent magnet factories operating at sustained economic scale.

Note: War on the Rocks (opens in a new tab) is a prominent American media outlet, news commentary website, and podcast network focusing on foreign policy, national security, and military affairs. It features analysis and commentary from experienced professionals, including military veterans, think tank scholars, and intelligence experts.

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