U.S. DoD Defense Industrial Strategy FY 2025 Implementation Plan–Includes Critical Minerals Supply Chain

Highlights

• The DOD is prioritizing the development of a domestic supply chain for critical materials like graphite, currently dominated by China.
• A comprehensive Risk Mitigation Framework targets supply chain resilience, workforce readiness, and technological innovation through phased actions.
• Initiatives like the BamaStar Graphite Project and Graphite Creek deposit aim to reduce geopolitical vulnerabilities in critical material production.

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Recently the U.S. Department of Defense (DOD) announced the executive branch agency’s prioritization of the development of a domestic supply chain for critical materials like graphite, essential for lithium-ion batteries used in military and civilian technologies. Historically reliant on foreign sources—particularly China, which controls about 77% of global graphite mining and over 90% of its refining—the U.S. faces significant vulnerabilities as geopolitical tensions rise. Initiatives like the BamaStar Graphite Project (opens in a new tab) in Alabama and the Graphite Creek deposit in Alaska (opens in a new tab), supported by the Defense Production Act (opens in a new tab) (DPA), aim to mitigate risks by fostering onshore mining, refining, and advanced manufacturing. This strategic shift, formalized under the National Defense Industrial Strategy Implementation Plan (opens in a new tab) (NDIS-IP), emphasizes resilience, allied collaboration, and risk management. While progress is evident, challenges such as high costs and regulatory barriers persist, necessitating sustained effort and public-private partnerships.

Key risk mitigation measures include leveraging programs such as the Defense Production Act (DPA), Industrial Base Analysis and Sustainment (IBAS), and the Rapid Integrated Scalable Enterprise (RISE), alongside significant investments in manufacturing technologies and critical areas like missiles, munitions, and microelectronics.

The plan also incorporates feedback from industry, academia, and international allies to foster collaboration and maintain a robust, unified approach to addressing vulnerabilities.

Implementation is designed for immediate and long-term impact, with significant investments planned for FY 2024-2025 and beyond. This includes scaling production capabilities and advancing innovative technologies. The DoD seeks active engagement from Congress, private industry, and allied nations to realize the plan’s vision of a responsive, resilient, and technologically advanced defense industrial base that safeguards U.S. and allied security for decades to come.

Risk Mitigation Framework

The Risk Mitigation Framework of the NDIS-IP establishes a structured approach to addressing vulnerabilities and ensuring the resilience of the U.S. defense industrial base. It focuses on balancing the risks of action and inaction while aligning risk mitigation efforts with the plan’s six key implementation initiatives. This framework outlines immediate (0–2 years), medium-term (3–4 years), and long-term (5+ years) actions to reduce threats and build a more resilient defense ecosystem.

• Resilient Supply Chains
• Addressing risks like fragile supply lines, material shortfalls, and limited spare capacity.
• Efforts include onshoring critical manufacturing and increasing the supply chain’s ability to surge in response to shocks.
• Workforce Readiness
• Mitigating the impact of reduced worker productivity and a lack of skilled labor on innovation and production.
• Focus on developing a capable and future-ready workforce to sustain supply chain operations and foster innovation.
• Flexible Acquisition and New Capabilities
• Addressing challenges in acquisition strategies that fail to align with desired outcomes and technological risks disrupting production.
• Developing innovative pathways to accelerate the deployment of critical technologies.
• Economic Deterrence
• Managing economic vulnerabilities that lead to increased costs and hinder industrial collaboration with allies and partners.
• Promoting sustainable partnerships and reducing over-customization to streamline development times and costs.
• Capabilities and Infrastructure Modernization
• Overcoming sustainment and logistics challenges that affect platform and material availability.
• Investing in modernizing infrastructure to enhance productivity and operational efficiency.
• Intellectual Property (IP) and Data Security
• Protecting critical IP from theft and adversarial control to maintain technological advantages.
• Ensuring trust, reputation, and security commitments by safeguarding sensitive data and promoting innovation.

Phased Mitigation Activities

• Immediate Actions (0–2 years): Address urgent risks and impacts affecting production, supply chains, and workforce readiness.
• Medium-Term Actions (3–4 years): Focus on bolstering partnerships, modernizing infrastructure, and refining acquisition strategies.
• Long-Term Actions (5+ years): Build resilience through sustained innovation, infrastructure upgrades, and maintaining a competitive technological edge.

Monitoring and Updates

The DoD ties each risk mitigation activity to measurable milestones, with regular updates from partners to track progress and assess residual risks. The classified annex will provide detailed metrics for implementation and outcomes, ensuring transparency and accountability.

This framework aligns all risk reduction efforts with the overarching NDIS-IP initiatives to strengthen the defense industrial base and address strategic priorities effectively.

What are some major assumptions?

• The U.S. can establish competitive domestic graphite production and refining capabilities despite China’s dominance and lower costs.
• Public-private partnerships will effectively translate investments into resilient supply chains without excessive bureaucratic or financial delays.
• Allied collaboration will mitigate the broader risks posed by adversarial control of critical materials without substantial geopolitical backlash.

Potential Biases

• Optimism about the scalability and economic feasibility of U.S. graphite production may overlook market realities, such as China’s entrenched cost advantage.
• Emphasis on “resilience” may downplay the environmental, regulatory, and logistical challenges of mining and refining operations domestically.
• Framing the issue as a matter of national security could obscure valid critiques or alternative solutions from non-defense stakeholders.

Critical Questions

• How will the U.S. address the technological and cost barriers of refining graphite at scale to compete with China’s dominance?
• What measures are in place to prevent environmental and regulatory issues from derailing domestic mining and refining projects?
• How can allied collaboration effectively offset China’s control of critical materials without exacerbating international tensions?