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In an era where technological dominance and national security are tightly intertwined, the United States Department of Defense (DoD) has identified the critical need to reduce reliance on foreign sources for rare earth elements (REEs). These essential materials, indispensable in the production of cutting-edge military systems such as fighter jets, submarines, and missile systems, are largely sourced from China, posing a significant strategic vulnerability. Recognizing this risk, the DoD has embarked on a bold initiative to build a resilient domestic supply chain for rare earth elements as part of its National Defense Industrial Strategy.
The Department of Defense (DOD) relies heavily on a diverse and complex industrial base, composed of both public-sector facilities and private-sector companies, to supply the products and services that underpin its warfighting capabilities. These commercial entities range from small businesses to some of the world’s largest corporations, providing everything from advanced military platforms like aircraft carriers to everyday items such as laptops and clothing. Additionally, they deliver a wide array of services, from routine IT support to highly specialized tasks like space vehicle launches.
However, the robustness of this Defense Industrial Base (DIB) is increasingly at risk due to the growing influence of foreign powers, particularly China. In October 2018, the Pentagon released a report accusing China of actively seeking to undermine the U.S. military’s industrial capabilities. The report highlighted China’s dominance in global military supply chains, especially in key sectors like rare earth metals used in high-tech defense equipment and specialty chemicals essential for munitions and missiles. It pointed out that China’s aggressive industrial policies had already eroded critical U.S. defense capabilities, including the production of solar cells for military use and flat-panel aircraft displays.
“A sudden and catastrophic loss of supply would disrupt DoD missile, satellite, space launch, and other defence manufacturing programs,” said the report, which warned that in many cases no substitutes were readily available. It contained particularly stark warnings on the risk of China’s growing technology prowess. “At risk is America’s loss of leadership in industries of the future such as artificial intelligence, quantum computing, and robotics,” the report said, noting that these would redefine the battlefield this century.
The Strategic Importance of Rare Earth Elements
Rare earth elements are a group of 17 metallic elements essential to numerous high-tech industries, including defense, aerospace, and electronics. Despite their name, REEs are not rare but are difficult and costly to extract and process. They are critical components in the production of permanent magnets, which are vital for defense applications such as the F-35 Lightning II aircraft, Virginia and Columbia-class submarines, and missile guidance systems. Additionally, REEs are crucial for commercial technologies like smartphones, electric vehicles, and renewable energy systems, making them a key resource in the global economy.
Reducing Foreign Dependence
Currently, the U.S. and much of the world depend heavily on China for the supply of rare earth elements. China controls over 80% of global rare earth production, creating a supply chain bottleneck that threatens U.S. military readiness and economic stability. This over-reliance exposes the U.S. to potential supply disruptions, whether due to geopolitical tensions, trade disputes, or shifts in China’s export policies. Addressing this vulnerability has become a top defense priority.
As part of its National Defense Industrial Strategy, the DoD is driving efforts to establish a fully integrated “mine-to-magnet” supply chain within the U.S., covering every stage of production from mining to final manufacturing.
Key Components of the “Mine-to-Magnet” Strategy
- Sourcing: The first step involves securing domestic sources of rare earth elements. Currently, the U.S. has only one operational rare earth mine. Expanding domestic mining capabilities is critical to ensure a stable and independent supply of REEs.
- Separation: After mining, rare earth elements must be separated from mineral ores. This complex process is essential to purify the elements and make them usable for further processing.
- Processing: The separated REEs are then refined into high-purity materials that are critical for military and commercial applications. This step ensures that the U.S. has access to the quality materials needed for advanced technologies.
- Metallization: Refined REEs are converted into metals, which are essential for alloying and other applications. This step links the upstream processing of rare earths with their downstream use in defense systems.
- Magnet Manufacturing: Rare earth magnets, particularly those made from neodymium, are used in advanced military systems such as radar, missile guidance, and electric propulsion systems. Establishing domestic magnet manufacturing capabilities ensures that the U.S. can meet the growing demand for these vital components.
DoD Investments and Progress
Since 2020, the DoD has committed over $439 million toward strengthening the domestic supply chain for rare earth elements. These investments span the entire production process, supporting the development of U.S. rare earth mining operations, refining facilities, and manufacturing capabilities. Some key projects include:
- Mining: The DoD has supported the expansion of domestic rare earth mines, providing critical funding to secure raw material sources.
- Separation and Processing: Investments have been made to establish domestic facilities that can separate and refine rare earth elements, reducing dependence on foreign processors.
- Magnet Manufacturing: The DoD has funded the development of domestic rare earth magnet production capabilities to meet defense needs. Companies like Noveon Magnetics and MP Materials have received significant support to build U.S.-based facilities capable of producing the magnets essential for defense technologies.
Among the companies involved, MP Materials in Nevada has received $45 million to enhance its rare earth oxide production, while Lynas USA secured $288 million to establish a second commercial-scale oxide production facility. The DOD has also invested in projects like coal ash extraction for rare earths and alternative magnet production techniques. Noveon Magnetics, TDA Magnetics, and E-VAC Magnetics are key players working on rare earth magnet production for defense needs.
Benefits of a Domestic Supply Chain
Building a domestic rare earth supply chain offers numerous benefits beyond reducing reliance on foreign sources. These include:
- Enhanced National Security: A secure, U.S.-based supply of rare earth elements ensures that critical defense systems are not vulnerable to supply chain disruptions or foreign political pressures. This strengthens the military’s ability to maintain operational readiness.
- Economic Growth: Developing the domestic rare earth industry will create jobs and stimulate economic growth. It will also foster innovation in mining, refining, and manufacturing technologies, positioning the U.S. as a global leader in this field.
- Technological Independence: By reducing reliance on foreign sources, the U.S. can maintain its technological edge in defense and other industries. A domestic supply chain allows for greater control over the production of advanced materials and reduces the risk of disruptions.
Future Outlook
The DoD’s efforts to establish a domestic rare earth supply chain are well underway, with key investments already producing results. However, much work remains to be done. The DoD plans to continue investing in mining, refining, and manufacturing capabilities to close remaining supply chain gaps and ensure the U.S. can meet future defense demands without overseas dependencies.
As part of its five-year strategy, the DoD is also exploring innovative ways to extract rare earth elements from alternative sources, such as coal ash and other waste streams, to further enhance domestic capacity. Future investments are expected to focus on promoting integration across the supply chain and attracting private capital to support the development of the U.S. rare earth industry.
Conclusion
Strengthening the domestic rare earth supply chain is a top priority for the U.S. Department of Defense. By investing in a fully integrated “mine-to-magnet” supply chain, the U.S. can reduce its reliance on foreign sources, enhance national security, and maintain its technological leadership. The DoD’s strategic investments in mining, processing, and manufacturing are laying the foundation for a resilient supply chain capable of supporting the nation’s defense needs well into the future.
