Defence companies are pushing Washington to delay a deadline, years in the making and now just months away, banning them from sourcing rare earth magnets from China for the US military.
Some defense groups want more time to comply with the prohibition on using Chinese samarium cobalt magnets and neodymium iron boron magnets for defense department contracts from January 1, according to four people familiar with the matter.
The magnets go into everything from electric vehicles and phones to fighter jets and weapons systems, but their production is dominated by China, which has tightened its grip by limiting access to the crucial materials. Western governments are now racing to reduce their exposure.
The Trump administration has worked at pace to inject billions of dollars into the US’s nascent rare earths industry, but China remains by far the dominant producer of rare earth elements, metals and magnets, with experts warning that building a fully developed alternative supply chain will take years.
Several US metals executives said the administration was unlikely to look on the lobbying favorably.
In a Truth Social post this month, President Donald Trump stressed that “all Federal agencies must buy American”, adding: “To the DC Bureaucrats: NO MORE handing out Waivers like candy!”
The Pentagon declined to comment.
Under rules introduced by Congress in 2018 during Trump’s first term, defense companies will be banned from supplying the US military with the magnets, as well as the metals tungsten and tantalum, if they have been sourced from China. The rules apply if any stage of the materials’ production has occurred in China, North Korea, Russia or Iran.
The change would “allow the United States — not an adversary — to define when, what and how we source materials for our defense industrial base”, said Abigail Hunter, executive director of Safe’s Center for Critical Minerals Strategy, an advocacy group.
“Now that we are facing ongoing conflict and the urgent need to replenish our weapons systems, we may need flexibility in execution — but we absolutely cannot dilute the original bipartisan policy intent,” she said.
One person familiar with the debate said defense companies were “pushing back”, arguing to Congress that they comprise a small segment of the overall magnet market, making it hard for them to influence it.
The rules are also intended to generate demand for US magnet producers to support a domestic industry that has struggled to remain viable in the face of competition from China.
Some magnet production exists outside China, including in Germany, South Korea and the US.
However, the Center for Strategic and International Studies warned in April that “unless significantly more capacity comes online in the next eight months, adhering to [the 2027 deadline] may not be feasible”.
Any delay could come in this year’s National Defense Authorization Act or in the form of waivers granted by the administration.
Companies may be able to obtain waivers for non-compliant items if they can show they have made efforts to map out their supply chains, among other criteria.
“Defense companies not doing a thing for eight years and then going to Congress looking for relief is unconscionable,” said lobbyist Jeff Green, whose clients include US magnet and rare earth companies. “I don’t think they’re going to find a lot of sympathy for the lack of proactivity on the issue.”
Companies are not always aware of the provenance of each component in complex and sprawling supply chains, with some procurement done by subcontractors, experts said.
The US Government Accountability Office warned last year that more than 200,000 defense department suppliers helped produce advanced weapons systems and other equipment, but that there was “little visibility into where these goods are manufactured”. Efforts to better understand supply-chain risks were “uncoordinated and limited in scope”.
By – https://www.ft.com/content/4d6651e1-17ff-4a72-b30b-065322cd58d0?syn-25a6b1a6=1