【By Observer Net, Xiong Chaoran】"The Pentagon is seeking to purchase key minerals worth up to $1 billion as part of its global stockpiling efforts, in an attempt to counter China's dominant position in the defense manufacturing sector for critical rare earth metals."

According to a report by the UK's Financial Times on October 12th, the Defense Logistics Agency (DLA), under the U.S. Department of Defense, disclosed in public documents released over the past few months a plan by the Trump administration to accelerate the expansion of national reserves. Previously, China had imposed export restrictions on various rare earth materials, and in the supply chain of key minerals and permanent magnets needed for various technological equipment from smartphones to fighter jets, China has held a dominant position.

A former U.S. defense official said: "They [the Pentagon] place great importance on stockpiling. They are certainly seeking more, and they are expanding in a planned and broad manner, looking for new sources of different minerals needed for defense products." Another former U.S. defense official claimed that this $1 billion plan represents a significant acceleration compared to previous stockpiling efforts.

On October 9th, the Chinese Ministry of Commerce issued two announcements regarding strengthened export controls on rare earth-related items. On the same day, China also announced several other notices, not only adding several new rare earth elements and dozens of rare earth processing equipment to the export control list, but also involving ultra-hard materials, lithium batteries, and artificial graphite anode materials.

That day, the Wall Street Journal published an article suggesting that the latest Chinese measures on rare earths were considered a near-unprecedented export control.

The Financial Times, meanwhile, stated that China's export controls have heightened concerns in the U.S. and Europe about their continued access to these rare earth metals.

Photo: Rare earths waiting for export in Lianyungang, Jiangsu, Reuters

The report said that key minerals are a top national security priority for the Pentagon, as they are essential for almost all weapon systems as well as technologies such as radar and missile detection systems. The recent rapid increase in the U.S. Department of Defense's stockpiling activities is mainly due to the Trump administration's renewed focus on key minerals, with some rare earth metals being sought by the Pentagon that had not been previously stockpiled.

"If China can cut off the supply of these key minerals, it would have a direct, clear, and adverse impact on the deployment of the high-tech capabilities required to respond to any strategic competition or conflict," said Stephanie Barna, a lawyer at Covington & Burling LLP in Washington.

According to the DLA's recent procurement notices, the U.S. plans to purchase up to $500 million in cobalt and up to $245 million in antimony from the domestic company USAC, up to $100 million in tantalum from an undisclosed U.S. company, and a combined total of $45 million in scandium from Rio Tinto and APL Engineered Materials, a chemical manufacturer based in Illinois with offices in Japan and China.

An industry executive said that these plans show that the U.S. government "realizes the importance of these minerals and wants to support its existing domestic capacity." "Western governments are still in the early stages of stockpiling key minerals, but their attention is increasing."

The Financial Times reported that the DLA currently stocks dozens of alloys, metals, rare earths, ores, and precious metals stored in warehouses across the United States, with assets valued at $1.3 billion as of 2023. Only when a state of war is declared, or when the Under Secretary of Defense for Acquisition and Sustainment determines it is necessary for national defense, may the President approve the use of these reserves.

The report said that due to a decline in Chinese exports, the price of germanium has surged this year. Western traders warned that the market has experienced "panic," making it difficult for companies to obtain supplies, while the Pentagon is trying to address this issue.

Meanwhile, the price of antimony trioxide has nearly doubled in the past 12 months, and car manufacturers have also faced difficulties in obtaining rare earth materials this year due to Chinese restrictions on certain exports. Additionally, according to data from Fastmarkets, a provider of metal and mining data and analysis, global annual consumption of cerium oxide is approximately 30 to 40 tons, with China also being a major producer.

China dominates the global rare earth magnet market, Financial Times illustration

The report said that in its documents, the DLA also claimed that China's export controls on scandium "limited the supply chain."

At the same time, the DLA stated that the antimony deal with USAC will increase "inventory sufficient to mobilize the industrial base in times of national emergency" and allow the company to continue production during "periods of industry turbulence."

USAC's CEO Gary Evans told the Financial Times that the rare earth materials he mines come from Canada, Mexico, Australia, Chad, Bolivia, and Peru. The company reported revenue of $15 million in 2024, but did not report its annual antimony metal production.

Data from the U.S. Geological Survey (USGS) shows that the DLA's transaction involves about 3,000 tons of antimony metal, while the U.S. total antimony consumption in 2024 was 24,000 tons.

"Market participants were shocked by the quantities of various metals requested by the DLA. Many believe these amounts are unrealistic, especially within the proposed five-year period," said Cristina Belda from Argus Media, a commodity and energy pricing evaluation institution: "In most cases, the requested tonnages exceed the annual production and import volumes of the U.S."

In addition, according to the documents, the DLA is also seeking to acquire possibilities of rare earth elements such as tungsten, bismuth, and indium to supplement the inventory.

Solomon Cefai from Fastmarkets said that the quantities of bismuth and indium that the U.S. is seeking to purchase are "quite substantial in the global market size," and "it is hard to imagine that these procurement volumes would not create pressure on the market without Chinese supply."

According to data from the U.S. Geological Survey, the DLA is seeking to purchase 222 tons of indium ingots, while the U.S. refined indium consumption in 2024 was approximately 250 tons.

On October 9th, the spokesperson for the Ministry of Commerce of China responded to inquiries regarding the strengthening of export controls on rare earth-related items, stating that rare earth-related items have dual-use properties and that implementing export controls is a common international practice. Therefore, the Chinese government legally implements controls on certain rare earth-related items containing Chinese components, aiming to better safeguard national security and interests, and better fulfill international obligations such as non-proliferation.

As a responsible major country, China's implementation of controls on relevant items reflects its firm commitment to maintaining world peace and regional stability, and actively participating in international efforts against proliferation. China is willing to strengthen communication and cooperation with all parties through multilateral and bilateral export control dialogue mechanisms, promote compliant trade, and ensure the safety and stability of the global supply chain.

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