The United States is accelerating efforts to establish a domestic supply chain for critical minerals essential to its defense industry, aiming to reduce reliance on China, which currently dominates global processing of these materials. Companies like Phoenix Tailings in New Hampshire are at the forefront of this initiative, using innovative methods to extract valuable minerals from mining waste and recycled electronics.
The U.S. military's demand for these minerals has become more urgent due to depleted stockpiles of advanced missile interceptors, such as Tomahawk cruise missiles and THAAD interceptors, following recent conflicts. The Pentagon has provided significant financial backing, including a $500 million loan to Phoenix Tailings, to help scale up domestic production.
Phoenix Tailings employs a process that uses electricity to refine mining waste and recycled magnets into metals needed for high-powered permanent magnets. These magnets are crucial components in advanced weaponry, including fighter jets, missiles, radar systems, and drones. Anthony Balladon, chief commercial officer at Phoenix Tailings, highlighted the critical role of these minerals, noting that a small quantity, worth tens of thousands of dollars, is essential for the functionality of multi-million dollar weapon systems.
While the U.S. is working to increase its processing capacity, it is a challenging and time-consuming endeavor. Balladon acknowledged that building new facilities and achieving significant production scale will take time, with Phoenix Tailings aiming for a 120-ton capacity by 2028. The company's long-term goal is to ensure the Western Hemisphere is free from Chinese influence in the rare-earth mineral sector.
Other U.S. companies are also adapting to the changing geopolitical landscape. Arnold Magnetic Technologies, for instance, has shifted its sourcing of samarium, a key component for its magnets, from China to Solvay, a European chemical company that has restarted processing of rare earths from old mining sites. While this new supply chain may involve higher costs, it is deemed acceptable as the critical minerals represent a small fraction of the overall cost of the weapon systems they are used in.
Despite these advancements, challenges remain. Brodie Sutherland, CEO of Patriot Critical Minerals Corp., expressed concern over the U.S. dependence on China for tungsten, a mineral where China controls approximately 80% of the global mine supply and an even larger share of processing. A Pentagon-imposed deadline of January 1, 2027, aims to prohibit defense contractors from sourcing critical materials from China, a goal Sutherland believes will be difficult to meet without significant ramp-up in domestic production.
An executive order signed by President Trump in July 2020 mandates that critical materials and components for military equipment be sourced domestically or from allied nations. Defense contractors like Lockheed Martin are actively assessing their global supply chains to ensure access to necessary materials. Major defense manufacturers such as Raytheon Technologies and Northrop Grumman did not comment on their specific strategies.