China’s abrupt restrictions on key critical minerals essential for U.S. defense production are disrupting supply chains and inflating costs. Defense manufacturers now face delays and skyrocketing prices, as reliance on Beijing’s rare-earth dominance produces a strategic vulnerability.
In April 2025, China introduced stringent export controls on seven heavy rare earth elements—such as samarium, dysprosium, terbium, gadolinium, lutetium, scandium, and yttrium—coupled with fresh licensing requirements and tight government oversight of shipments. These minerals are integral to fighter jets, missiles, navigation systems, and other advanced military hardware.
Western defense firms report production setbacks due to delayed shipments. One U.S. drone parts supplier postponed military orders by as much as two months while seeking non-Chinese sources of magnets derived from samarium and dysprosium. Prices for some minerals have surged, with offers for samarium commanding up to 60 times pre-restriction rates.
China remains the dominant player—mining approximately 70–90 percent of the world’s rare earths and controlling over 90 percent of processing and refining capacity. Export curbs are viewed as retaliation against trade tensions and a strategic effort to limit access by foreign military customers.
The impact stretches across U.S. military systems. Advanced weapons—from F‑35 jets and submarines to infrared sensors and smart bombs—depend on these minerals. Some analysts warn China’s leverage could decisively undermine U.S. defense readiness and industrial re‑industrialization ambitions.
In response, the Department of Defense made a $400 million equity investment in MP Materials and accelerated efforts to bring rare‑earth processing back to American soil. Still, domestic production remains early‑stage and years away from full operational capacity.
Additional western miners—including USA Rare Earth, Vulcan Elements, and Lynas—are scaling operations, but they are not expected to be market competitive before late 2025 or early 2026.
