Rare Earth Minerals, Strategic Leverage, and the Fragility of U.S. Supply Chains
By Jessica McFate
Rare earth minerals sit at the heart of modern technology, yet they remain largely invisible to most consumers and even many policymakers — until a disruption occurs. From advanced military systems and semiconductors to electric vehicles, renewable energy infrastructure, and medical imaging, rare earth elements (REEs) and other critical minerals underpin the technologies that power the U.S. economy and national security. The problem is not their importance; it is who controls them.
Analysis across defense, technology, and contested logistics consistently points to the same conclusion: China’s dominance of rare earth and critical mineral supply chains represents one of the most significant strategic vulnerabilities facing the United States today.
What are rare earth elements — and why do they matter?
Rare earth elements are a group of 17 metals — 15 lanthanides plus scandium and yttrium — that possess unique magnetic, catalytic, and conductive properties. Despite the name, they are not especially rare in the Earth’s crust. What is rare is the ability to economically extract, separate, refine, and process them at scale.
These materials are essential for:
- Permanent magnets used in electric vehicle motors, wind turbines, and precision-guided weapons
- Semiconductors and RF components, including gallium- and germanium-based chips
- Defense platforms, such as AESA radars, missile guidance systems, and stealth technologies
- Medical technologies, including MRI machines and diagnostic equipment
Disruption in the supply of this small subset of minerals — such as gallium, germanium, neodymium, dysprosium, and terbium — can ripple across entire industries when access is constrained.
China’s structural control of the supply chain
The strategic risk does not stem solely from mining. While rare earth deposits exist globally — including in the U.S. — China controls the most critical stages of the value chain:
- A majority share of global rare earth mining
- An overwhelming share of separation and refining capacity
- Near-dominance in magnet production and downstream manufacturing
Decades of coordinated industrial policy allowed China to outcompete and ultimately displace Western producers, often by accepting lower margins and higher environmental costs in the short term. The result is a system in which the U.S. and its allies remain deeply dependent on Chinese processing — even when raw materials are sourced elsewhere.
This midstream concentration is the real vulnerability. A disruption at the processing or export-control level can halt production of advanced systems even when upstream mining continues uninterrupted.
Weaponized interdependence and supply chain risk
China has demonstrated a willingness to use critical materials as geopolitical leverage. Export restrictions on gallium, germanium, graphite, and other inputs have already shown how quickly supply chains can be stressed. Even short-term disruptions can cascade into:
- Delayed defense procurement and readiness gaps
- Higher costs and production slowdowns for U.S. manufacturers
- Reduced availability of advanced electronics and medical devices
Babel Street’s work on contested logistics frames this as a broader trend: supply chains are no longer neutral commercial systems but arenas of strategic competition. Rare earths and critical minerals are foundational industries — too important to remain exposed to single-point failures or adversarial control.
How the U.S. can mitigate rare earth supply chain risk
There is no single solution, but there are several complementary approaches:
Diversify and “friendshore” supply chains — Building partnerships with allied nations that possess mineral resources is essential. However, diversification must extend beyond mining to include processing, refining, and manufacturing — otherwise dependency simply shifts locations without reducing risk.
Rebuild domestic processing capacity — Onshoring refining and separation capabilities is expensive, time-consuming, and environmentally complex, but it is strategically unavoidable. Without midstream capacity, domestic mining alone does little to improve resilience.
Invest in recycling and alternative sourcing — Recycling rare earths from electronics, batteries, and industrial waste can reduce pressure on primary supply chains. Emerging innovations, such as chip and magnet recycling, could meaningfully offset future demand.
Stockpiling and strategic reserves — Targeted stockpiles of the most critical materials can provide short-term buffers against disruption, particularly for defense and healthcare applications where delays carry outsized risk.
Improve supply chain visibility and risk intelligence
Rare earth dependence is not a temporary market imbalance — it is a structural challenge shaped by geopolitics, industrial policy, and technological competition. The question is no longer whether supply chains will be contested, but how prepared organizations and governments are to operate in that reality.
Perhaps most critically, organizations must be able to see their exposure. Supply chain and vendor dependencies lie several tiers deep — often obscured by complex ownership structures, foreign influence, or opaque supplier networks. Continuous monitoring and OSINT-driven risk intelligence are essential to identifying vulnerabilities before they become crises.
To learn more about the need to understand all tiers in your vendor ecosystem, watch the replay of our webinar, “Beyond Tier-1: How Regulated Industries Detect Hidden Vendor Risk and Adversarial Exposure.”