Western defense companies are now facing serious delays after China restricted the export of minerals needed to build U.S. military hardware.
According to Wall Street Journal, these limits are choking the supply chain for parts used in jets, missiles, drones, and even night-vision gear. Lockheed Martin, RTX, Boeing, Leonardo DRS, and other Pentagon suppliers are now rushing to secure non-Chinese sources, but time and options are running out.
The clampdown started earlier this year as tensions between Washington and Beijing escalated. Beijing began demanding full disclosure from buyers about how they plan to use the rare earths they import. Companies must now send product drawings, images of their production lines, and lists of clients before they can get anything shipped.
Approvals for civilian orders are still coming through, but requests tied to defense are either delayed or blocked. The pressure has pushed one major drone parts supplier to delay military orders by up to two months.
Pentagon contractors scramble to hold onto limited stock
China’s rare earth dominance isn’t new. It already supplies about 90% of global demand. But the new restrictions target materials used specifically in weapons.
Some companies are paying five times the regular price. Others are being quoted up to sixty times more. Samarium, for example, which is needed for magnets that can survive the heat of a jet engine, recently hit record offers.
Bill Lynn, the chief executive of U.S.-based Leonardo DRS, said on a recent call that the company is now down to its “safety stock” of germanium. “In order to sustain timely product deliveries, material flow must improve in the second half” of 2025, he warned.
The company uses germanium in its infrared sensors for missiles and other weapons systems. Lynn added that they’re now working on alternative sourcing and trying to redesign products so they don’t rely on the mineral.
The Pentagon has told all contractors they must stop buying magnets made with China-linked minerals by 2027. But stockpiles aren’t deep. Some companies hold less than a year’s supply.
Others only have weeks of inventory. And drone startups, which are usually underfunded and lack the expertise to manage global supply chains, are the most vulnerable.
Shipping delays and strikes add more pressure
New Hampshire’s ePropelled, which builds propulsion systems for drones, recently got hit with demands from their Chinese supplier. The forms asked for detailed photos of products and buyer lists to prove the magnets wouldn’t be used for military purposes.
Traders say China is also making it nearly impossible to build a reserve. They won’t approve licenses for traders who don’t declare exactly who the end users are. That’s cutting off the ability to store rare earths in advance.
To fight back, the Department of Defense is spending big. It gave $14 million to a Canadian company last year to increase germanium production. In July, it put $400 million into MP Materials, which owns the largest rare earth mine in the Americas.
Lockheed CEO James Taiclet said that investment will help secure magnets for F-35 jets and cruise missiles, though he admitted that supply won’t come online fast enough.
The Pentagon also set up the Critical Minerals Forum last year to help U.S. and allied mining projects secure funding.
There are already signs of how far China will go to block access. Earlier this year, United States Antimony Corporation tried to ship 55 metric tons of antimony from Australia to its smelter in Mexico, passing through the Chinese port of Ningbo. The shipment got held in customs for three months.
When China finally released it in July, they forced the company to send it back to Australia. The seals were broken when it arrived, and the company is now investigating whether the load was tampered with. “The shipping company, everyone who was involved, they’d never seen this happen before,” CEO Gary Evans said.
On top of all this, Boeing just got hit with a labor strike. More than 3,200 workers walked off the job in St. Louis and Illinois after rejecting a second contract offer. The rejected deal included a $5,000 ratification bonus, a 20% general raise, and better vacation and sick leave. Boeing said it had a contingency plan ready to go and called the offer fair.
“We’re disappointed our employees in St. Louis rejected an offer that featured 40% average wage growth,” said Dan Gillian, who manages the St. Louis operations. The same contract terms were already rejected once the week before.
