EXETER, New Hampshire – American companies are accelerating efforts to expand domestic production of critical minerals as the United States moves to reduce the defense industry’s dependence on Chinese supplies of rare earth elements and other strategic materials.
The push has gained momentum following the recent conflict with Iran, which increased demand for advanced missile systems and air defense interceptors while highlighting the importance of secure supply chains for U.S. military production.
Federal funding, new procurement rules and private investment are driving the expansion of domestic processing capacity, although industry leaders say rebuilding supply chains will take years.
Pentagon Backs Domestic Rare Earth Production
One of the companies benefiting from the initiative is Phoenix Tailings, a Massachusetts-based processor that extracts rare earth metals from mining waste and recycled materials.
The company recently received a $500 million Pentagon loan to expand its refining operations after spending eight years developing an electricity-based process that reduces reliance on traditional chemical refining methods.
Phoenix Tailings said construction of a larger processing facility is expected to take between 12 and 18 months.
“Our purpose is to ensure that the entire Western Hemisphere, the United States and its allies are free of Chinese influence within the rare-earth space,” said Anthony Balladon, the company’s chief commercial officer and co-founder.
Defense Demand Increases Pressure on Supply Chains
The expansion comes as the U.S. military replenishes stocks of Tomahawk cruise missiles, Patriot air defense systems and Terminal High Altitude Area Defense (THAAD) interceptors following recent military operations.
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At the same time, the Trump administration has tightened sourcing requirements for defense contractors.
A July 20 executive order directs that critical materials and components used to manufacture, maintain and repair U.S. military equipment should come from domestic producers or allied nations instead of China.
Balladon said expanding production will require both additional processing facilities and greater access to raw materials.
Phoenix Tailings currently produces about 200 kilograms (440 pounds) of samarium each year. The rare earth metal is used in high-performance magnets found in missiles, fighter aircraft, drones and radar systems.
The company expects production to increase to about five metric tons within three months before reaching roughly 120 tons annually by late 2027 or 2028.
According to Balladon, the U.S. defense sector requires between 50 and 100 tons of samarium each year.
Recycling Provides a Near-Term Solution
Rather than relying solely on newly mined ore, Phoenix Tailings recovers rare earth metals from mining waste, recycled permanent magnets and discarded computer hard drives.
The company uses electricity to remove oxygen from processed materials, producing refined metals that can later be manufactured into permanent magnets for defense, aerospace and automotive applications.
Industry executives say recycling existing materials could help close supply gaps while new mines and large-scale processing facilities are developed.
Companies Diversify Supply Chains
Other manufacturers are also reducing their dependence on Chinese processing.
Arnold Magnetic Technologies, a U.S. producer of samarium-cobalt magnets used in precision-guided weapons, has shifted its samarium supply from China to Belgian chemical company Solvay.
The material is processed in La Rochelle, France, where Solvay restarted rare earth refining after suspending operations more than two decades ago as China expanded its dominance of the industry.
Solvay said the renewed production reflects growing customer demand for secure, traceable and diversified sources of critical minerals in Europe and North America.
Matt Blake, chief executive of Arnold Magnetic Technologies, said paying more for non-Chinese samarium has been manageable because the magnets represent only a small share of the overall cost of advanced weapons systems.
Long-Term Challenges Remain
Despite increased investment, industry leaders caution that rebuilding domestic supply chains cannot happen quickly.
Brodie Sutherland, chief executive of Patriot Critical Minerals Corp., said tungsten remains one of the industry’s biggest vulnerabilities because China controls about 80% of global mine production and an even larger share of processing capacity.
He warned that meeting the Pentagon’s Jan. 1, 2027 deadline to phase out China-sourced tungsten will require a combination of existing inventories, recycling and supplies from allied countries while new domestic production comes online.
A recent analysis by the Center for Strategic and International Studies also found that replenishing U.S. inventories of Tomahawk missiles, Patriot systems and THAAD interceptors could take at least three years, highlighting the broader challenge of expanding defense manufacturing capacity.
Lockheed Martin said it continues evaluating global rare earth supply chains to secure materials needed for its defense programs. Raytheon Technologies and Northrop Grumman did not comment, according to the Associated Press.
Balladon said continued cooperation between government and industry will be essential to meeting future defense requirements.
“Ultimately, with the right support and partners across the industry, we think we can make it happen,” he said.
This report is based on reporting by The Associated Press.
