China Controls 90% of Rare Earth Magnets Used in Precision-Guided Munitions

Precision-guided munitions like the Joint Direct Attack Munition (JDAM), Excalibur GPS-guided shells, and Small Diameter Bombs depend on samarium-cobalt (SmCo) and neodymium-iron-boron (NdFeB) rare earth magnets for their guidance systems, fin actuators, and sensor motors. China refines over 85 percent of the world's rare earths and produces nearly 90 percent of high-performance rare earth permanent magnets. Approximately 78 percent of U.S. weapons programs contain components that depend on rare earth magnets sourced from or through China. This dependency means that in any conflict scenario involving China, the adversary could cut off the materials needed to build the weapons intended to fight it. Without SmCo magnets, the compact motors that manipulate flight control surfaces in smart bombs would require hydraulic systems that are three times as large, heavier, and more expensive, effectively making many precision munitions designs unbuildable. The U.S. military's entire shift toward precision strike over the past 30 years assumed a globalized supply chain that a peer adversary could sever. China has already demonstrated willingness to weaponize this leverage. In late 2023 and 2024, China imposed new export restrictions on gallium, germanium, and rare earth processing technologies. These restrictions do not just affect raw materials but target the mid-stream refining and magnet manufacturing steps where China's dominance is most absolute. Even if the U.S. mines rare earth ore domestically, it must send it to China for processing because no domestic refining capacity exists at scale. The root cause is decades of underinvestment in domestic rare earth processing. China built its monopoly through sustained industrial policy, subsidies, and willingness to absorb the environmental costs of rare earth refining. Western companies could not compete on price and exited the market. The Mountain Pass mine in California resumed operations under MP Materials, but it ships concentrate to China for refining. Building a complete domestic supply chain from mine to magnet is estimated to require 10-15 years and billions of dollars in investment that the private sector will not make without guaranteed defense procurement contracts.