Pentagon seeks $1B in critical minerals for stockpile to counter China’s grip: FT

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The Pentagon is moving to acquire up to $1 billion worth of critical minerals as part of an intensified effort to secure supplies of metals vital to U.S. defense systems and advanced technologies, the Financial Times reported Sunday. The initiative, detailed in recent public filings by the Defense Logistics Agency (DLA), marks one of the largest expansions of America’s strategic materials stockpile in years.

The push comes as Beijing tightens export controls on several key minerals, reinforcing U.S. fears about dependence on Chinese supply chains for components used in everything from smartphones to fighter jets.

A former defense official described the initiative as both “deliberate and far-reaching,” noting that the Department of Defense is “actively searching for new sources and materials” essential to national security. Another former official said the scale, roughly $1 billion, represents a sharp acceleration over past efforts to rebuild the strategic reserve, the FT reported.

TRUMP ESCALATES TRADE TENSIONS WITH NEW TARIFFS

China last week week introduced sweeping restrictions on exports of rare earths and related technologies. In response, President Donald Trump announced on Friday that he would not meet Chinese President Xi Jinping as planned later this month and vowed to impose an additional 100 percent tariff on Chinese imports.

“There is no way that China should be allowed to hold the world captive,” Trump said, arguing that Beijing’s strategy has been to dominate global mineral supply chains.

The restrictions have heightened anxiety in Washington and Brussels about long-term access to materials critical for defense and clean energy technologies.

CRITICAL MINERALS AS A SECURITY IMPERATIVE

For the Pentagon, securing reliable access to minerals such as cobalt, antimony, tantalum and scandium has become a strategic priority. These materials are embedded in nearly every advanced weapons system and radar platform, as well as missile guidance, batteries and communications technologies.

Recent DLA solicitations include up to $500 million for cobalt, $245 million for antimony sourced from U.S. Antimony Corp., $100 million for tantalum and about $45 million for scandium from Rio Tinto (NYSE:RIO [https://seekingalpha.com/symbol/RIO]) and Illinois-based APL Engineered Materials.

An industry executive said the plans show “how aware the U.S. government has become of the strategic importance of these minerals” and its growing intent to strengthen domestic production capacity.

BUILDING A STRONGER STOCKPILE NETWORK

The DLA manages dozens of strategic commodities including alloys, rare earths and precious metals stored across government depots nationwide. As of 2023, those assets were valued at $1.3 billion. The materials can only be released by presidential order during wartime or when deemed essential to national defense.

Prices for several minerals have surged in recent months. Germanium, used in semiconductors and optics, has spiked amid reduced Chinese exports, while antimony trioxide prices have nearly doubled year-over-year. Car manufacturers have also struggled to obtain rare earths following China’s export curbs.

Trump’s One Big Beautiful Bill Act allocates $7.5 billion for critical mineral initiatives, including $2 billion to reinforce the defense stockpile by 2026 or early 2027. The legislation also sets aside $5 billion for Pentagon investments in mineral supply chains and $500 million for a federal credit program aimed at stimulating private-sector mining and refining.

One former official said that several Pentagon offices managing mineral security are now “flush with cash” as a result of the new funding. The DLA declined to comment to the FT.

INDUSTRY REACTIONS AND GLOBAL MARKET PRESSURE

Analysts at Jefferies said the DLA’s scandium purchase from Rio Tinto (NYSE:RIO [https://seekingalpha.com/symbol/RIO]), around 6 tonnes, was priced above expectations, noting that total global scandium oxide consumption is only 30 to 40 tonnes per year, most of it from China.

In its filings, the DLA said Chinese export controls had “constrained the supply chain” for scandium. Similarly, its proposed deal with U.S. Antimony Corp. would create a reserve large enough “for industrial base mobilization in a national emergency.”

U.S. Antimony sources raw material from Canada, Mexico, Australia, Chad, Bolivia and Peru, according to CEO Gary Evans. The company generated $15 million in 2024 revenue. The Pentagon’s potential 3,000-tonne antimony purchase would equal about one-eighth of total U.S. consumption last year, government data show.

Some market watchers have been startled by the scale of the DLA’s proposed buys, the FT reported.

The DLA is also evaluating acquisitions of rare earth elements, tungsten, bismuth and indium. Analysts noted that the proposed bismuth and indium volumes are large enough to strain non-Chinese supply. The agency has floated interest in purchasing 222 tonnes of indium ingots, nearly matching total U.S. refined consumption in 2024, according to the U.S. Geological Survey.

MORE ON RIO TINTO

* Rio Tinto: Restructuring And Growing In Future-Facing Metals [https://seekingalpha.com/article/4826361-rio-tinto-restructuring-and-growing-in-future-facing-metals]
* Rio Tinto: The Income Is Strong, The Catalysts Are Weak [https://seekingalpha.com/article/4822745-rio-tinto-the-income-is-strong-the-catalysts-are-weak]
* Rio Tinto Group Switches Hard Hats At The Top [https://seekingalpha.com/article/4816965-rio-tinto-group-switches-hard-hats-at-the-top]
* Rio Tinto and partners to spend $733M on Australian iron ore hub [https://seekingalpha.com/news/4502177-rio-tinto-and-partners-to-spend-733m-on-australian-iron-ore-hub]
* Work halted at Simandou iron ore project after three workers die in accident [https://seekingalpha.com/news/4501742-work-halted-at-simandou-iron-ore-project-after-three-workers-die-in-accident]