Pentagon to Spend $1 Billion on Critical Minerals to Reduce Dependence on China

Building a Strategic Mineral Reserve

The U.S. Department of Defense has announced a new plan to invest up to $1 billion in critical minerals, aiming to strengthen national security and reduce reliance on Chinese supply chains. The Defense Logistics Agency (DLA) will oversee the purchases, which come as China tightens export restrictions on rare earth elements and related materials.

Under this initiative, the Pentagon plans to stockpile a diverse range of strategic resources such as cobalt, antimony, tantalum, and scandium. Other metals, including tungsten, indium, and bismuth, are also being considered. Current filings suggest that the DLA may allocate approximately $500 million for cobalt, $245 million for antimony, $100 million for tantalum, and $45 million for scandium.

Expanding Beyond Traditional Stockpiling

This large-scale acquisition marks a significant shift in U.S. strategy. Historically, the Defense Department maintained modest reserves of critical minerals, but the new plan represents a much more aggressive approach. The initiative is part of the “One Big Beautiful Bill Act,” a legislative package providing $7.5 billion for critical mineral initiatives. Of that, $2 billion is dedicated to Defense stockpiling through 2027.

Analysts, however, warn that the Pentagon’s ambitious goals may outpace available global supply outside China. Many of these minerals are sourced or refined primarily in China, making diversification a long and challenging process.

Investing in Domestic Supply Chains

Beyond direct mineral purchases, the Pentagon has taken an active role in supporting U.S. mining firms. Earlier in 2025, the Department of Defense acquired a $400 million stake in MP Materials, the only company currently operating a rare earths mine in the United States. The deal included a $150 million loan and a 10-year offtake agreement guaranteeing magnet production prices to protect the company from market volatility. The Pentagon’s equity position makes it MP Materials’ largest shareholder.

This move signals a major policy shift—from simply buying minerals to actively shaping supply chains. By injecting capital, securing long-term contracts, and expanding national reserves, the Defense Department aims to build a resilient domestic foundation capable of supporting military and industrial needs.

Despite these bold efforts, significant hurdles remain. Developing new mining and refining operations in the U.S. can take years due to environmental reviews, community opposition, and permitting delays. Moreover, skilled labor shortages and limited processing capacity could slow progress. If the government’s interventions distort markets or outstrip supply, the strategy’s long-term sustainability could face serious tests.

Still, the Pentagon’s $1 billion drive reflects a growing recognition that critical minerals are now central to defense and economic strategy. As global competition for resources intensifies, controlling supply chains may become just as vital as maintaining military strength.