How America’s military runs on Chinese rare earths

America's military relies heavily on rare earth elements almost exclusively supplied and refined by China, creating a significant national security vulnerability.

• U.S. military relies heavily on rare earths, with China dominating global supply and processing.

• China uses its rare earth monopoly as a powerful geopolitical and economic leverage.

• Rebuilding a domestic U.S. rare earth supply chain faces significant challenges, including time, cost, environmental, and social hurdles.

Modern defense technologies, from F-35s to submarines, depend on rare earth elements like Neodymium and Dysprosium, with China dominating over 85% of their refining and more than 90% of rare earth magnet production. This reliance makes the U.S. military vulnerable to its geopolitical rival's supply chain. The U.S. formerly led rare earth production but outsourced due to environmental costs and regulations, allowing China to gain market control through aggressive investment and price manipulation.

China's Rare Earth Dominance

• 00:00:37 Nearly all rare earth elements, critical for modern defense technologies and devices, originate from China, which is the undisputed leader in their supply chain. China refines about 85% of rare earths and produces over 90% of the world's rare earth magnets, making various industries, including the U.S. defense sector, reliant on its production. The environmental costs and complexities of processing rare earths led many countries, including the U.S., to step out of the industry, allowing China to fill the void by tolerating the pollution and investing heavily.

The Rise and Fall of US Production

• 00:04:36 America was once the world's largest rare earth producer, with the Mountain Pass mine in California providing most of the global supply for decades. However, in the 1980s, stricter environmental regulations and rising operational expenses made domestic production less attractive, leading to outsourcing and the eventual shutdown of the US Bureau of Mines. China capitalized on this by accepting the environmental burden, leveraging low labor costs, and employing lax environmental standards, along with export incentives, to undercut competitors and achieve near-total dominance by 2005.

Rare Earths as a Geopolitical Tool

• 00:06:36 China's dominance in rare earths is not just economic but also political, as demonstrated by its use of export controls as a bargaining chip in international disputes. A 2010 embargo on Japan over a sovereignty dispute and 2025 export controls on seven types of rare earths and magnets during a trade war with the U.S. illustrate China's willingness to weaponize its market position. These incidents forced countries to re-evaluate their dependence, highlighting that a 90-day disruption could cripple a large percentage of U.S. defense contractors.

America's Rebuilding Efforts & Challenges

• 00:09:24 The U.S. is actively trying to reduce its dependency on Chinese rare earths, utilizing measures like the Defense Production Act to boost domestic production and channeling significant federal funding to new mines and magnet plants. Key projects include the Round Top Mountain in Texas and an MP Materials magnet factory, backed by government purchase agreements, aiming to rebuild a complete domestic supply chain. However, this endeavor faces substantial challenges, including a decade-long timeline, billions in investment, stringent environmental regulations, social opposition on indigenous lands, and the ongoing global expansion of Chinese rare earth interests.