A report out recently makes something explicit that many procurement professionals suspected was coming: China is not loosening its export controls on rare earth minerals. What we thought was a temporary position looks to become long-term policy.
China, rightly, sees its rare earths as a matter of national security.
The US has come to the same conclusion, but decades neglecting the domestic supply chain have taken their toll. We’ve set aggressive policies for eliminating Chinese and other adversarial rare earths from the supply chain, and provided some state-backed financing and government investment, along with lucrative contracts.
But it’s too little too late to meet our goals. The new DFARS sourcing restrictions start on January 1, 2027, and defense contractors are already asking for delays. All the supply chain and infrastructure it takes to turn minerals into finished magnets and electronics takes years to set up, even if the mining capacity is there.
Procurement teams need to watch this situation closely, and document their own supply chains. Do you know where your minerals are sourced? Where your components come from? Who owns those companies? What parts of your supply chain are still dark?
More likely than not, the Pentagon will grant some initial exceptions where it’s impossible to eliminate minerals on time. But we don’t know where those exceptions will land, or how long they will last. In the meantime, everyone needs to take supply chain illumination seriously.