Modern defense systems—stealth fighters, guided missiles, submarines, satellites, radars, and advanced communication systems—depend on a hidden but critical family of materials: rare earth elements (REEs).

These 17 elements, including neodymium, dysprosium, terbium, yttrium, and europium, are essential for manufacturing permanent magnets, lasers, night-vision optics, precision guidance systems, and many high-performance alloys.

While rare earth ores are found in many parts of the world, the refining and separation process—the step that transforms raw minerals into usable, high-purity materials—is overwhelmingly dominated by China.

As of the mid-2020s, China controls more than 90% of global rare earth refining, over 80% of magnet production, and a growing share of downstream manufacturing in electronics, green energy, and defense-related components.

This monopoly gives Beijing a unique form of geostrategic leverage—not merely as a supplier, but as a potential gatekeeper for entire value chains.

The Western defense establishment, heavily dependent on these refined materials, faces one of its greatest strategic vulnerabilities since the Cold War.

1. The Anatomy of Dependence

The U.S., EU, Japan, and South Korea possess rare earth deposits and even some legacy refining capacity. Yet most of their supply chains depend on Chinese-processed materials. For example:

• The F-35 Lightning II, America’s most advanced fighter jet, uses about 417 kilograms of rare earth materials, particularly neodymium, samarium, and dysprosium, for radar, guidance, and propulsion systems.

• Missile guidance systems rely on terbium-doped sensors and yttrium-aluminum-garnet lasers.

• Nuclear submarines use rare earth-based magnets in sonar systems.

• Communication satellites depend on europium and yttrium for phosphors in control displays and signal systems.

Even when these components are manufactured outside China, their critical sub-materials often trace back to Chinese refiners in Inner Mongolia or Jiangxi Province. This dependency is deep and structural—rooted not in scarcity of resources, but in decades of outsourced environmental and economic costs.

2. How the Dependence Formed

In the 1980s and 1990s, Western countries—especially the United States—had significant rare earth operations. The Mountain Pass mine in California, for instance, was once the world’s largest producer. However, as environmental regulations tightened and profit margins shrank, companies found it cheaper to buy refined materials from China, which offered ultra-low-cost exports supported by state subsidies, cheap labor, and lax environmental enforcement.

China’s leadership saw an opportunity. As early as 1987, Deng Xiaoping famously remarked, “The Middle East has oil; China has rare earths.” Over the next three decades, Beijing deliberately integrated mining, refining, and advanced manufacturing under tight government coordination. Western firms, driven by quarterly profits rather than long-term industrial strategy, allowed their supply chains to hollow out.

This outsourcing mirrored the broader deindustrialization trend in Western economies. While the U.S. focused on software and finance, China built a physical foundation of metallurgical, chemical, and materials-processing infrastructure—assets that now underpin both its civilian and military-industrial power.

3. The Geopolitical Leverage of Supply Chain Control

China’s control over rare earth refining provides it with an invisible but potent lever of geopolitical influence. Rare earths are not just another commodity; they are the DNA of modern technology. Beijing has demonstrated its readiness to weaponize this control—subtly or overtly—when its interests are challenged.

The 2010 Japan-China dispute over the Senkaku Islands (Diaoyu Islands) is the most cited example. When Japan detained a Chinese fishing captain, Beijing temporarily halted rare earth exports to Japan. The embargo was never officially declared, but customs data and Japanese industry reports confirmed a sharp drop in shipments. The shock forced Japanese firms, particularly in electronics and automotive sectors, to scramble for alternative suppliers.

For Western defense systems, the potential impact of such a disruption would be even greater. A coordinated restriction on refined rare earth oxides or metals could:

• Halt production of precision-guided munitions and radar systems.

• Delay maintenance cycles for aircraft, ships, and satellites.

• Undermine readiness across NATO supply chains.

In a crisis scenario—say, a Taiwan contingency—China could use export controls or price manipulation to slow Western mobilization, disrupt defense contracts, or divide allies through differential access.

4. Vulnerability Beyond the Mines

Even if Western nations reopen mines or invest in recycling, refining remains the choke point. Rare earth separation requires complex chemical processes—solvent extraction, ion exchange, precipitation—often involving hundreds of steps. These are capital- and pollution-intensive, with byproducts such as radioactive thorium.

China’s mastery of this process rests on decades of state-backed investment and the co-location of supply chains. For example:

• Baotou, Inner Mongolia, hosts not only refining plants but also magnet, motor, and component factories.

• Ganzhou, Jiangxi, is a hub for heavy rare earths and advanced magnet recycling.

This integration means China can capture value at every stage, from ore to finished product, while Western nations face fragmented, costly, and heavily regulated systems. Thus, even if new mines in the U.S., Canada, or Australia ramp up, the raw materials often still end up in China for processing.

5. National Security and Defense Implications

The vulnerability of Western defense systems to Chinese supply chain control manifests in several ways:

a. Operational Risk

If China were to impose export restrictions, the U.S. and its allies could face production stoppages in key weapons programs. Even short disruptions could delay defense contracts, reduce readiness, or increase costs dramatically.

b. Intelligence Exposure

Reliance on Chinese-processed materials introduces potential supply chain espionage risks—through contamination, inferior substitutes, or embedded components with altered specifications.

c. Strategic Leverage

Beijing’s knowledge of Western defense reliance gives it a bargaining chip in diplomatic and trade negotiations. Subtle reminders of supply vulnerability can temper the policy positions of countries considering sanctions, military cooperation with Taiwan, or tech restrictions.

d. Technological Lag

Because many high-performance magnets and alloys are made in China, Western firms face barriers to innovation without access to Chinese processing know-how. Over time, this dependence can erode indigenous R&D capacity.

6. Steps Toward Resilience

The U.S. and its allies have begun to recognize the threat. Initiatives include:

• Pentagon-backed investment in rare earth magnet production under the Defense Production Act.

• Australia’s Lynas Rare Earths, now developing a U.S.-based refinery in Texas.

• EU Critical Raw Materials Act (2024), which mandates diversification of sourcing and processing by 2030.

• Japan’s joint ventures with ASEAN countries to secure heavy rare earths.

However, rebuilding a full supply chain could take 5–10 years and requires sustained political will, environmental compromise, and financial incentives. The biggest challenge is not mining, but scaling up refining and alloy manufacturing at competitive cost.

7. A Strategic Weakness in the Arsenal

Western defense systems remain highly vulnerable to Chinese control of rare earth supply chains. This vulnerability is not a technical inevitability but the result of strategic neglect, where short-term economics trumped national resilience. China, through decades of disciplined policy, converted environmental leniency and industrial planning into a form of geopolitical power.

As global tensions rise, the West faces a hard truth: its technological superiority rests on materials largely controlled by its strategic rival. Without decisive action to rebuild refining capacity, secure allied supply networks, and innovate substitutes, Western defense power will continue to rest on fragile foundations—built, ironically, with Chinese-processed metals.