.png?crop=0x20x100x95&resize=1920x1080)
The Pentagon has initiated a sweeping $1 billion acquisition of critical minerals, marking a significant escalation in efforts to safeguard national security and bolster domestic supply chains. The initiative, detailed in public filings from the Defense Logistics Agency (DLA) and reported by the Financial Times, underscores the growing geopolitical tensions between the world’s two largest economies over control of resources essential to high-tech and defense industries.
Critical minerals, including rare earth elements, cobalt, antimony, tantalum, and scandium, are vital to the production of fighter jets, radar systems, missile guidance tools, smartphones, electric vehicles, and myriad green technologies. Their importance to national security cannot be overstated. Yet, China currently dominates the global supply chain for these valuable materials, mining more than half of the world’s rare earths and accounting for over 90% of processing capacity.
Recognizing this vulnerability, the Pentagon has accelerated its stockpiling strategy. “They’re definitely looking for more, and they’re doing it deliberately and expansively,” a former U.S. defense official told the FT. The scale of the $1 billion procurement represents a sharp increase from prior stockpiling efforts.
As part of its intensified procurement drive, the Defense Logistics Agency (DLA) has outlined plans to acquire significant quantities of critical minerals. This includes a substantial investment of up to $500 million in cobalt, which is vital for various technologies and defense applications. Additionally, the agency intends to procure $245 million in antimony from US Antimony Corp., further enhancing domestic mineral availability. In the pursuit of tantalum, the DLA aims to secure $100 million from an undisclosed American supplier, highlighting the importance of this mineral for electronics and military uses. Lastly, the agency is set to invest $45 million in scandium, with sourcing planned from both Rio Tinto and Illinois-based APL Engineered Materials. These strategic acquisitions reflect the national effort to strengthen critical mineral supply chains and bolster domestic production.
According to reports, these strategic purchases aim not only to create a buffer against potential supply disruptions but also to catalyze domestic capacity in a market long dominated by low-cost Chinese producers. While the DLA already maintains a metal and alloy stockpile valued at $1.3 billion (as of 2023), these newly targeted materials include some not previously stockpiled, reflecting changing defense and technology needs.
The stockpiling push coincides with a fresh escalation in U.S.-China trade tensions. Just last week, Beijing imposed new export restrictions on rare earths and technologies related to semiconductors, prompting Trump to cancel a planned summit with Chinese President Xi Jinping. He also announced a sweeping 100% tariff on Chinese imports, declaring on Truth Social, “There’s no way that China should be allowed to hold the world ‘captive’ but that seems to have been their plan.”
China’s move appears to mirror U.S. actions aimed at curbing access to cutting-edge semiconductors. The tit-for-tat measures have renewed fears of a prolonged tariff war akin to the earlier standoff in 2018–2019. China's Ministry of Commerce quickly issued a firm warning that Beijing is prepared for retaliatory countermeasures, further destabilizing diplomatic efforts and roiling markets.
The strategic materials market has already begun reacting to the widening policy rift. Prices of several key minerals have surged amid concerns of limited supply. For example, antimony trioxide prices have nearly doubled in the past year, and germanium, another rare metal facing Chinese export constraints, has seen sharp price increases. Automakers and electronics producers are increasingly reporting rare earth shortages, further intensifying pressure on non-China sourcing efforts.
Yet, surprisingly, the DLA’s proposed purchase volumes appear to exceed the entire U.S. annual production and import levels. Cristina Belda of Argus Media told the FT that procurement targets for materials like indium may outstrip available non-China supply. Solomon Cefai of Fastmarkets echoed these concerns, noting that the desired 222 tonnes of indium would nearly equal total annual domestic consumption; thus, strapped capacity could intensify market tightness.
Additionally, some deals have raised eyebrows due to price variances. Jefferies analysts observed that the Pentagon’s scandium agreement with Rio Tinto was priced higher than prevailing market expectations, potentially a reflection of urgency and lack of domestic competition.
To further diversify sources, the Pentagon is reportedly considering stockpiling minerals harvested from the Pacific Ocean seabed, an area rich in nickel, copper, cobalt, and manganese. Although politically and environmentally contentious, undersea mining could potentially offer alternative reserves free from Chinese control.
With the Pentagon’s massive buying spree now underway, the United States is taking an aggressive stance to mitigate vulnerabilities in its supply chain and insulation from the strategic leverage of foreign rivals. However, with China firmly in control of most processing infrastructure and signs of an intensifying trade war, questions linger around just how quickly the U.S. can build the necessary capabilities at home.
Still, one thing is clear: Critical minerals are now a geopolitical fault line. And in this battle for technological supremacy, supply chain resilience may prove just as pivotal as military might.