US companies are stepping up to cut reliance on China for critical
minerals used in key weapons
[August 04, 2026] By
DIDI TANG, JOSH FUNK and RODRIQUE NGOWI
EXETER, N.H. (AP) — Tucked inside a New Hampshire office park, a small
refinery zaps mining waste with electricity to tease out critical
minerals needed for key U.S. weapons systems, including missiles used in
the Iran war.
It can play a part in helping America break the chokehold China has on
processing critical minerals, but it will take up to a year and a half
to build a new factory as the Trump administration pushes to expand
domestic production. The company, Phoenix Tailings, recently got a $500
million loan from the Pentagon to ramp up its work, after starting out
eight years ago as a backyard lab seeking a cleaner metal-refining
method. It's just the latest critical minerals company the government
has backed.
The task that workers carry out in heat-resistant suits and sealed face
masks has become more urgent as the Iran conflict draws down key
munitions such as Tomahawk cruise missiles and THAAD interceptors. While
the White House is demanding military contractors speed up production,
it’s also imposing stricter rules banning them from sourcing critical
minerals from China.
“It will be a tall order and a challenge to replenish these stocks and
scale up in the timeframe needed to meet defense demand and
regulations,” said Anthony Balladon, chief commercial officer and a
co-founder of Phoenix Tailings. He said the company is working hard to
boost capacity.
Although the U.S. is quickening its pace to build domestic supplies of
critical minerals free of control from its most formidable rival, it
will likely take years for companies across the industry to build new
mines and boost production of the high-powered magnets essential in many
high-tech applications. Extracting some of the hard-to-pronounce
elements from existing mine waste can help satisfy the growing demand in
the meantime, but it will likely take several companies to do that.
Critical minerals industry has big plans, but it will take time to
ramp up
Phoenix Tailings taps waste from traditional mining as well as recycled
magnets and disk drives as raw materials, working to counter China in
processing where it has the strongest hold on the supply chain.
The company based in the Boston-area city of Woburn, Massachusetts,
plans to build a bigger facility to extract and produce critical metals
needed in not only defense but also the aerospace and automotive
industries.
“We call it the freedom facility because, ultimately, the purpose of
this is to ensure that the entire Western Hemisphere, the United States
and its allies are free of Chinese influence within the rare-earth
space,” Balladon said.
On a recent afternoon, two technicians in heat-resistant hazmat suits
were operating an apparatus of cylinders, tubes, funnels and control
panels set up on a platform with bright yellow railings. A chemical
process involving electricity removes oxygen and turns the material into
a grayish metal that can be used to make the extremely strong permanent
magnets used in fighter jets, missiles, radar systems and drones.
The metals that Phoenix Tailings refines and other critical minerals
play “an outsized role” in defense systems, Balladon said. A $150
million weapons system won’t work if it's missing critical minerals that
may be worth only $20,000 to $30,000, he said.
The defense sector is particularly reliant on the metal samarium and
needs 50 to 100 tons each year, but U.S. capacity is very limited, he
said.
Phoenix Tailings is among the few companies capable of producing the
final metal, according to Balladon, but its capacity is only about 200
kilograms (440 pounds) a year. He said the company will scale up to
about 5 tons in the next three months but that it will be next year or
2028 before it reaches its goal of 120-ton capacity.
Another US magnet maker looks to France for raw materials
Arnold Magnetic Technologies for years relied on China for samarium to
produce the extremely strong, stable-in-high-temperatures magnet that
goes into precision-guided missiles such as Tomahawks.
That doesn’t work anymore. For Arnold, the solution to getting the
critical minerals it needs has come from a relic of Europe’s past
rare-earth industry — abandoned mining dirt in the French city of La
Rochelle.
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This image taken from video shows an office park that is home to
Phoenix Tailings' rare earth metal refinery Friday, July 17, 2026,
in Exeter, N.H. (AP Photo/Rodrique Ngowi)
 Solvay, a Belgium-headquartered
chemical company, stopped separating and processing rare earths from
the mined dirt in the 2000s. That was when China was building up
most of the world’s processing capacity with a determination to
dominate the industry.
China weaponized that near-monopoly last year by choking off its
flow of processed critical materials and forcing the U.S. government
to back off during a trade war. Solvay then restarted work and has
added other rare earths this year, including samarium.
“This ramp‑up is driven by several factors: rapidly growing demand
for permanent magnets, increased geopolitical focus on supply chain
security, and strong customer demand in Europe and the United States
for more diversified, resilient and traceable sources of supply,” a
Solvay spokesperson said.
For Arnold Magnetic Technologies, paying more to get its supply from
Solvay instead of China has not been a deal-breaker, because the
samarium-cobalt magnets it makes account for only a small cost in a
weapon system, said Matt Blake, Arnold's CEO.
“They are not the absolute cost drivers,” he said.
Plus, the company says the surge in demand for magnets has worked in
its favor.
Some concerns remain. The U.S. is dependent on imports of the
critical mineral tungsten, with China controlling roughly 80% of the
global mine supply and an even larger share of processing, according
to Brodie Sutherland, CEO of Patriot Critical Minerals Corp.
Sutherland, whose company seeks to explore and mine tungsten in the
U.S., is concerned that America will not be able to get by without
China-sourced tungsten after a Pentagon-imposed deadline of Jan. 1,
2027.
Efforts to ramp up U.S. production will take years, he said, and in
the meantime, the Pentagon and its defense contractors will need to
rely on existing inventories, expanded recycling and limited
non-China sources.
The Iran war and Trump's China order create pressure and
opportunity
The need to increase production has become more urgent as renewed
fighting with Iran digs into the U.S. military’s already diminished
stockpiles of advanced missile interceptors, including Patriots and
THAADs, according to a recent analysis from the Center for Strategic
and International Studies, a Washington think tank.
It also has raised concerns that the military would have diminished
firepower in any potential future conflict with China. CSIS warned
in May that it could take at least three years to replenish
stockpiles of Tomahawks, Patriots and THAADs, or Terminal High
Altitude Area Defense interceptors.
At the same time, President Donald Trump has announced stricter
controls on defense contractors sourcing critical materials from
China.
“It is the policy of the United States that not only the finished
equipment deployed by our military, but also the critical materials
and components necessary to manufacture, maintain, sustain, and
repair that equipment, are sourced domestically or from allied
nations,” the July 20 executive order says.
Lockheed Martin, which makes THAADs and many other weapons systems,
said “we continuously assess the global rare earth supply chain to
ensure access to critical materials that support our customers’
missions.” Several other major U.S. defense contractors, including
Raytheon Technologies and Northrop Grumman, didn’t respond to
requests for comment.
Balladon, of Phoenix Tailings, was confident in U.S. companies.
“Ultimately, with the right support and partners across the
industry, we think we can make it happen,” he said.
___
Funk reported from Omaha, Nebraska.
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