Highlights

• The U.S. defense industry heavily relies on rare earth elements.
• 70% of rare earth elements were previously imported from China, creating a strategic vulnerability.
• The Department of Defense (DoD) is investing $439 million to develop domestic rare earth mining, refining, and magnet production capabilities to reduce foreign dependence.
• By 2027, defense contractors must eliminate rare earth inputs from China, Russia, Iran, and North Korea or face significant production challenges.

Lockheed Martin, Northrop Grumman, and RTX rely heavily on rare earth elements—especially high-performance permanent magnets—for advanced military hardware. A single F-35 Lightning II contains over 900 pounds of REEs embedded in electronics, actuators, and motors, while naval vessels and missiles also draw heavily on these materials for sensors, guidance systems, and electric drives. Metals such as neodymium, praseodymium, samarium, dysprosium, and terbium give magnets the strength and heat-resistance essential for jet engines, precision weapons, radar arrays, and satellites.

Between 2020 and 2023, about 70% of U.S. rare-earth compounds and metals were imported from China, which still controls around 90% of global refining capacity and dominates magnet production. Even allied miners have long depended on Chinese processors, exposing a single point of failure for U.S. defense supply chains. This became clear in 2022 when the Pentagon paused F-35 deliveries after discovering a Chinese samarium-cobalt alloy in a Honeywell magnet, later issuing a waiver to resume deliveries.

In response, DoD has invested more than $439 million since 2020 under the Defense Production Act to jump-start U.S. mining, refining, and magnet plants, including MP Materials in California and Lynas in Texas. Congress also tightened sourcing rules through successive NDAAs, and a DFARS clause now requires contractors to disclose magnet provenance; starting Jan. 1, 2027, it will ban NdFeB and samarium-cobalt magnets containing inputs from China, Russia, Iran, or North Korea at any stage of production.

Trump’s return to office in 2025 hardened the landscape. On April 4, Beijing imposed export controls on seven medium and heavy REEs—including dysprosium and terbium—and on finished NdFeB magnets, forcing U.S. primes into an urgent scramble to line up non-Chinese suppliers in Japan, South Korea, and elsewhere as oxide prices spiked.

Defense contractors are now tracing supply chains “to the atom,” qualifying alternate sources, and exploring recycling and design substitutions. Meanwhile, Washington is anchoring new domestic capacity. In July 2025, DoD took a roughly 15% stake in MP Materials, backed a multibillion-dollar expansion, and set a $110/kg price floor for NdPr oxide to shield U.S. output from Chinese undercutting. Magnet factories are under construction in Texas and Oklahoma, with allied partners in Australia, Japan, and Europe aligning to supply U.S. defense needs. The stakes are high: by 2027, either the primes sever their reliance on Beijing or the Pentagon faces tough choices between waivers and production delays—proof that in this race, “no minerals, no missiles” is more than a slogan.

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