China Again Chokes Off Critical Rare Earths Needed for Defense – MishTalk

Trump threatened China with tariffs for doing business with Russia. Guess what?

Choke Hold on Rare Earths

The Wall Street Journal reports China Is Choking Supply of Critical Minerals to Western Defense Companies

Earlier this year, as U.S.-China trade tensions soared, Beijing tightened the controls it places on the export of rare earths. While Beijing allowed them to start flowing after the Trump administration agreed in June to a series of trade concessions, China has maintained a lock on critical minerals for defense purposes. China supplies around 90% of the world’s rare earths and dominates the production of many other critical minerals.

As a result, one drone-parts manufacturer that supplies the U.S. military was forced to delay orders by up to two months while it searched for a non-Chinese source of magnets, which are assembled from rare earths.

Certain materials needed by the defense industry now go for five or more times what was typical before China’s recent mineral restrictions, according to industry traders. One company said it was recently offered samarium—an element needed to make magnets that can withstand the extreme temperatures of a jet-fighter engine—for 60 times the standard price. That is already driving the cost of defense systems higher, say suppliers and defense executives.

The squeeze on critical minerals highlights how dependent the U.S. military is on China for much of its supply chain—giving Beijing leverage at a time of rising tensions between the two powers and heated trade negotiations. Defense manufacturers supplying the U.S. military rely on minerals that are mainly produced in China for microelectronics, drone motors, night-vision goggles, missile-targeting systems and defense satellites.

While companies have tried to find alternative sources of these minerals in recent years, some of the elements are so niche that they can’t be economically produced in the West, say industry executives.

In addition to the more recent export controls on rare earths, China has since December banned sales to the U.S. of germanium, gallium and antimony—which are used for things like hardening lead bullets and projectiles, and to allow soldiers to see at night.

Some companies now warn of looming production cuts if more minerals aren’t forthcoming.

On Wednesday, the chief executive of Leonardo DRS said the U.S.-based defense firm is down to its “safety stock” of germanium.

“In order to sustain timely product deliveries, material flow must improve in the second half” of 2025, CEO Bill Lynn said on a conference call. The company is the U.S. subsidiary of Italian defense giant Leonardo.

Germanium goes into the company’s infrared sensors, which are used in missiles and other equipment. Lynn said that the company is looking at diversifying its supply chain while also finding ways to replace it in its products.

The Pentagon is requiring defense contractors to stop buying rare-earth magnets that contain China-sourced minerals by 2027. [If this is not stupid then someone tell me who the alternate source is.]

But suppliers and defense companies often hold less than a year’s worth—some just a few months—of many other critical mineral stockpiles.

Drone manufacturers are among the most vulnerable, because many are small startups and have very limited revenue or supply-chain savvy, and never got around to acquiring large stockpiles of rare-earth magnets and metals, say some in the defense industry.

More than 80,000 parts that are used in Defense Department weapons systems are made with critical minerals now subject to Chinese export controls, according to data from defense software firm Govini. Nearly all of the supply chains for key critical minerals used by the Pentagon rely on at least one Chinese supplier, Govini said, meaning restrictions from Beijing can cause widespread disruptions.

Since stepping up export controls earlier this year, China has begun requiring companies to provide extensive documentation of how they will use the rare earths and magnets they import. Chinese regulators often demand sensitive information, such as product images and even photos of production lines, to ensure none of the materials go to military use, say Western buyers.

The Department of Defense has awarded grants to expand production of niche materials, including $14 million in funding last year to a Canadian company to produce germanium substrates used in solar cells for defense satellites. In July, the Pentagon took an even bigger step when it agreed to pay $400 million for a stake in MP Materials, the operator of the largest rare-earths mine in the Americas, which is rapidly scaling up its magnet manufacturing capacity.

The Pentagon didn’t respond to a request for comment.

Dear Canada

Please tell the U.S. to F O unless and until Trump cuts tariffs.

Trump should be working with Canada and Mexico on rare earths. But Trump spits in their faces.

I suggest Canada spit back.

Defense companies that traditionally outsourced the purchase of critical minerals to sub-suppliers are now using their market heft to try to acquire sources of key materials themselves. Major defense companies “are starting to get more and more panicked as they go, because they recognize that they’re just not going to get the magnets, no matter what happens, unless they get involved,” said Nicholas Myers, the CEO of Phoenix Tailings, a Massachusetts startup that produces rare-earth metals.

Beijing is signaling that it takes its mineral export bans very seriously. Earlier this year, one U.S. defense supplier, the United States Antimony Corporation, tried to ship 55 metric tons of antimony mined in Australia to its smelter in Mexico. The load transited via the Chinese port city of Ningbo—until recently a routine practice.

But in April, while the shipment was being transloaded in Ningbo, China customs detained it for three months, prompting United States Antimony to ask the State Department and White House for help.

The Chinese released the shipment in July, on the condition that it be sent back to Australia and not to the U.S. When it arrived in Australia, United States Antimony learned that product seals had been broken. It is currently working out whether the antimony has been tampered with or contaminated.

“The shipping company, everyone who was involved, they’d never seen this happen before,” said company CEO Gary Evans.

Dear Australia

Please tell the U.S. to F O unless and until Trump cuts tariffs.

Bessent Flashback

“Trump goaded China into a bad position”. Yeah right.

Hoot of the Day – 100 to 500 Percent Tariffs on China