China’s Rare Earth Curbs Pressure US Missile Magnet Supply Chain as Domestic Production Ramps Up

Efforts by the United States to strengthen its domestic supply of critical minerals have taken on renewed urgency as China’s restrictions on rare earth materials continue to disrupt production of components used in advanced weapons systems. American companies are now racing to expand processing capacity, but industry leaders say it will take time before domestic supply can meet growing defense demand.

One company at the center of that effort is Phoenix Tailings, whose refinery in Exeter, New Hampshire, extracts valuable rare earth elements from mining waste and recycled materials. Backed by a $500 million Pentagon loan, the company plans to significantly increase its ability to separate and refine critical metals that are essential for defense, aerospace and automotive manufacturing.

Pentagon-Backed Expansion Targets Supply Chain Gap

Phoenix Tailings processes mining waste, known as tailings, along with recycled magnets and hard disk drives to recover rare earth elements. The company specializes in separation and metallization, one of the weakest links in the United States’ rare earth supply chain and an area where China continues to dominate global production.

According to company officials, construction of a new production facility is expected to take between 14 and 18 months. The expanded operation is intended to boost U.S. capacity to produce critical metals including neodymium, praseodymium, terbium, dysprosium, samarium and yttrium.

These materials are widely used in military equipment ranging from Tomahawk cruise missiles and THAAD missile interceptors to F-35 fighter jets, as well as in radar systems and drones.

Defense Demand Increases Pressure on Critical Minerals

The need for domestic production has intensified as ongoing conflict in the Middle East places additional strain on U.S. weapons stockpiles. At the same time, the Trump administration has tightened restrictions preventing defense contractors from sourcing critical mineral components from China.

Anthony Balladon, co-founder and chief commercial officer of Phoenix Tailings, said rebuilding supply chains while meeting rising defense requirements will be challenging.

“It will be a tall order and a challenge to replenish these stocks and scale up in the time frame needed to meet defense demand and regulations,” Balladon said.

He said the company is working to rapidly expand production as demand for domestically sourced rare earth materials continues to grow.

Mining Waste Becomes a Strategic Resource

Rather than relying on newly developed mines, Phoenix Tailings extracts rare earth elements from existing mining waste and recycled products. Industry experts say this approach can help ease supply shortages while larger mining projects, many of which remain years away from commercial production, are developed.

The company’s planned facility, which it calls the “Freedom” facility, is intended to reduce dependence on Chinese processing capacity and strengthen supply chains across the United States and allied nations.

“We call it the Freedom facility because, ultimately, the purpose of this is to ensure that the entire Western Hemisphere, the United States and its allies are free of Chinese influence within the rare-earth space,” Balladon said.

Rare Earth Metals Play Critical Role in Modern Weapons

Inside Phoenix Tailings’ refinery, technicians use an electrolysis process to remove oxygen from rare earth oxides, producing neodymium-praseodymium metal that can be used to manufacture high-performance permanent magnets.

These magnets are vital components in advanced military platforms, including fighter aircraft, precision-guided missiles, radar equipment and unmanned aerial systems.

Balladon said even though rare earth materials account for only a small fraction of a weapon system’s total cost, their absence can prevent highly sophisticated military equipment from functioning.

US Production Capacity Still Limited

Despite plans to expand, Phoenix Tailings acknowledges that domestic production remains far below future demand. The U.S. defense sector requires between 50 and 100 tons of samarium each year, but current domestic capacity is only a fraction of that level.

According to Anthony Balladon, Phoenix Tailings is among the few American companies capable of producing finished samarium metal. The company currently manufactures about 200 kilograms annually and expects to increase output to roughly 5 tons within the next three months. Its long-term target is to reach an annual production capacity of 120 tons by next year or 2028.

US Magnet Maker Turns to France for Supply

Another American manufacturer, Arnold Magnetic Technologies, has also been forced to adjust its supply chain after China’s export restrictions disrupted access to processed rare earth materials.

For years, the company relied on Chinese samarium to manufacture samarium-cobalt magnets used in precision-guided missile systems such as the Tomahawk cruise missile.

It has now begun sourcing rare earth materials from Solvay, a Belgium-headquartered chemical company that restarted rare earth processing at its facility in La Rochelle, France. The site, which had previously ceased rare earth operations in the 2000s, resumed production after China’s export restrictions intensified global concerns over supply chain security.

Solvay said growing demand for permanent magnets, geopolitical concerns and customer interest in diversified and traceable supply chains were key reasons behind the expansion.

Arnold Magnetic Technologies said the higher cost of European supplies has not significantly affected its business because the magnets account for only a small portion of the total cost of advanced weapons systems.

Tungsten Remains a Major Concern

While progress is being made with some rare earth elements, industry leaders say other strategic minerals remain difficult to replace.

Brodie Sutherland, chief executive officer of Patriot Critical Minerals Corp., warned that the United States is unlikely to eliminate its dependence on Chinese tungsten before the Pentagon’s January 1, 2027 sourcing deadline.

He noted that China controls about 80% of global tungsten mine production and an even greater share of downstream processing, leaving the United States heavily dependent on imports.

Sutherland said expanding domestic mining will take years, meaning defense contractors may need to rely on existing inventories, recycling efforts and limited alternative suppliers outside China.

Defense Needs and New Rules Increase Pressure

The challenge has become more urgent as ongoing military operations and global tensions place additional pressure on U.S. missile inventories.

According to an analysis by the Center for Strategic and International Studies (CSIS), replenishing stockpiles of Tomahawk missiles, Patriot systems and THAAD interceptors could take at least three years.

At the same time, President Donald Trump signed an executive order on July 20 imposing stricter requirements that defense contractors source critical materials domestically or from allied nations. The order also limits the Pentagon’s ability to grant waivers when domestic supplies are unavailable.

“It is the policy of the United States that not only the finished equipment deployed by our military, but also the critical materials and components necessary to manufacture, maintain, sustain, and repair that equipment, are sourced domestically or from allied nations,” the executive order states.

Lockheed Martin said it continues to evaluate the global rare earth supply chain to ensure access to critical materials for its defense programs. Other major defense contractors, including Raytheon Technologies and Northrop Grumman, did not comment on the report.

Industry Sees Long-Term Opportunity

Although significant challenges remain, companies involved in rare earth processing believe the current geopolitical environment presents an opportunity to rebuild domestic manufacturing capabilities.

Balladon said success will depend on continued cooperation between government agencies, manufacturers and supply chain partners as the United States works to reduce its reliance on Chinese rare earth processing while strengthening long-term national security.