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Highlights

• The DoD's Mine-to-Magnet program aims to establish a domestic supply chain for rare earth elements for military technologies.
• Defense contractors face a 2027 mandate to source magnets from non-Chinese suppliers, highlighting current supply chain vulnerabilities.
• Strategic investments and partnerships are critical for the defense sector to secure resilient rare earth material sources and maintain technological superiority.

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The U.S. Department of Defense (DoD) has initiated the "Mine-to-Magnet (opens in a new tab)" program to establish a domestic supply chain for rare earth elements essential for manufacturing permanent magnets used in military weapons systems. Additionally, a mandate requires defense contractors to source magnets from non-Chinese suppliers by 2027.

Despite these measures, the defense industry appears to lag behind sectors like electric vehicle (EV) manufacturing in securing resilient rare earth element (REE) supply chains. This delay is surprising, given the critical importance of REEs in defense applications, including missile guidance systems, radar, and other advanced technologies.

Why the Defense Industry May Be Lagging

Several factors contribute to the defense sector's slower progress. One factor likely is market share and demand drivers.  The defense sector accounts for approximately 5% of U.S. demand for rare earth materials, whereas the commercial sector, particularly EV manufacturers, represents a significantly larger share. This disparity means that commercial industries have stronger market incentives to develop and secure supply chains.

As reported by Mikayla Easley for National Defense Magazine, (opens in a new tab) other factors include regulatory and bureaucratic hurdles, not to mention historical dependence. The defense industry has traditionally relied on established supply chains, including those involving Chinese sources, and altering these entrenched systems requires substantial time and investment.

So, what Evidence for Lagging in the Defense Sector?

The 2027 mandate for sourcing non-Chinese magnets underscores the current dependency and the urgency of change. The necessity of such a deadline indicates that the industry has not proactively addressed supply chain vulnerabilities to the same extent as sectors like EV manufacturing.

Initiatives by Defense Firms

Leading defense contractors are beginning to take steps to enhance REE supply chain resilience.

For example, while specific initiatives are not publicly detailed, sources inform Rare Earth Exchanges that  (opens in a new tab)Lockheed Martin (opens in a new tab) is assessing its supply chains to comply with upcoming regulations and reduce dependency on foreign REE sources. 

Then there is RTX (opens in a new tab) (formerly Raytheon), which is now exploring alternatives to Chinese suppliers for key components, acknowledging the need to mitigate geopolitical risks and ensure compliance with future mandates.  Undoubtedly, Northrup Grumman (opens in a new tab), Boeing, (opens in a new tab) and others are doing the same.

Directions

To address these challenges, the defense industry can consider several strategies, such as investing in domestic production and collaborating with domestic REE producers to establish a reliable supply chain within the United States. For instance, the DoD has invested in companies like MP Materials to develop domestic processing capabilities.

According to a February 2022 White House briefing (opens in a new tab) on the topic, the following directives included research and development to find alternative materials and technologies to reduce the current rare earth supply chain dependencies. Just as important are the necessary strategic partnerships. For example, defense contractors have formed or are sourcing key non-Chinese international suppliers in a quest to diversify sources while reducing dependency on any single country.

The White House briefing also mentioned implementing robust tracking and verification processes to ensure compliance with sourcing regulations and identify potential vulnerabilities.

In conclusion, while the defense industry has recognized the critical importance of securing REE supply chains, it currently lags behind sectors like electric vehicle manufacturing in implementing resilient solutions. Proactive measures, strategic investments, and compliance with imminent regulations are essential to enhancing national security and maintaining technological superiority.