China is tightening its control over exports of critical minerals essential for Western defense production, triggering serious supply disruptions for U.S. and allied military contractors. The move underscores Beijing’s growing leverage over key components of Western defense systems, as geopolitical and trade tensions with Washington continue to escalate.

According to industry executives and officials, China—responsible for over 90% of global rare earths production—has imposed strict controls requiring importers to provide detailed documentation of end-use, especially for defense-related applications. Defense companies now report delays of up to two months and price surges as high as fivefold for minerals like samarium and germanium.

Defense Systems Strained by Delays

Drone parts suppliers and contractors producing night-vision goggles, cruise missiles, targeting systems, and fighter jets are particularly affected. One supplier was quoted samarium—used in jet engine magnets—at 60 times its previous cost. Others, like ePropelled, reported Chinese suppliers demanding product images and buyer lists, prompting the firm to halt orders and seek non-Chinese alternatives.

“In order to sustain timely product deliveries, material flow must improve in the second half [of 2025],” warned Leonardo DRS CEO Bill Lynn, who said the firm is down to its safety stock of germanium, crucial for missile and infrared technology.

U.S. Response: Strategic Stockpiling and Investment

The Pentagon has moved to mitigate the crisis. In July, it invested $400 million in MP Materials—the operator of North America’s largest rare earths mine—securing a path to domestic magnet production for F-35 jets and other advanced weapons. The U.S. is also expanding support for startups like Vulcan Elements and USA Rare Earth, though these companies won’t be ready to scale supply until late 2025 or 2026.

The Department of Defense is requiring all contractors to eliminate China-sourced rare-earth magnets from their supply chains by 2027.

Broader Impact and Strategic Risks

More than 80,000 parts used in Pentagon weapons systems depend on minerals now subject to Chinese export restrictions, according to defense data firm Govini. Nearly all supply chains involve at least one Chinese supplier.

“Defense companies are getting more panicked by the day,” said Nicholas Myers, CEO of Phoenix Tailings, a U.S. rare-earth startup. “They realize they won’t get the magnets they need unless they directly secure the sources.”

Beijing has shown it’s willing to act on these restrictions. In one case, China detained a shipment of antimony in Ningbo port for three months, ultimately sending it back to Australia—possibly compromised. U.S. agencies involved declined to comment.