Highlights
- China is selectively restricting rare earth exports to U.S. defense manufacturers, causing production delays and supply chain disruptions.
- Chinese authorities are using critical minerals as a geopolitical leverage tool, similar to how OPEC once used oil.
- The restrictions are tactical and designed to slow down Western defense production without completely halting exports.
In its August 4 defense digest, Defense One confirmed what many in the critical minerals space already suspected: China’s tightening rare earth export regime is now directly impacting U.S. defense manufacturers. The Wall Street Journal and Defense One as well as Rare Earth Exchanges (REEx) reported that Chinese customs recently delayed or diverted rare earth shipments bound for American military suppliers—including a high-profile case where a drone parts maker experienced a two-month production delay due to magnet shortages.
The details are concrete. A U.S. supplier of military-grade drones was forced to halt orders while scrambling for non-Chinese neodymium magnet sources. Meanwhile, United States Antimony Corporation (opens in a new tab), attempting to reroute 55 metric tons of Australian antimony through China to Mexico, found its shipment held for three months in Ningbo port.
Ultimately, Chinese authorities forced the cargo back to Australia—and allegedly opened or compromised the product en route. This raises not only questions about strategic chokepoints, but also supply chain integrity in an era of geopolitical hardball.
According to Defense One’s Peter Singer and Tye Graham, this new licensing regime isn’t simply a bureaucratic shift—it’s a calculated lever in China’s geopolitical toolkit, designed to slow down adversaries’ weapons programs while maintaining plausible deniability. State-linked Chinese commentary has increasingly framed rare earths as a “pressure valve” on U.S. defense ambitions.
Crucially, this is not a blanket ban. It’s selective, tactical, and aimed at slowing—not stopping—Western defense production. The implication? China is now using critical minerals the way OPEC once used oil: as a strategic throttle. For the U.S. defense ecosystem, the question becomes urgent: How much longer can suppliers limp along with “just-in-time” procurement models when strategic minerals are being pulled into shadow diplomacy?
Unanswered in the article—but critical for REEx readers:
What’s the Pentagon’s contingency plan if Chinese REE exports are further restricted?
We often wonder about this, and have ideas we have and will continue to share
Are downstream defense integrators auditing their supply chain exposure to REE magnet and alloy bottlenecks?
We hear troubling stories as to the less-than-stellar optimization of defense supply chains
Can allies like Australia, Canada, and Vietnam scale up fast enough to matter?
The more the tight, forward thinking partnerships infused with rare earth element /critical mineral industrial policy, the better.
Bottom Line
The rare earth weaponization playbook is now open and active. For defense-facing investors and policymakers alike, the question isn’t if China will escalate—it’s how far it’s willing to go, and in some ways, perhaps, the same could be said about USA when looked at from the Far East nation.
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