The Supply Chain Crisis Impacting Defence: Critical Minerals Vulnerability
The global defence sector faces unprecedented challenges as critical mineral supply chains experience severe disruptions. With China controlling the majority of processing capacity for essential defence materials and recent export restrictions on key elements, Western military capabilities are increasingly at risk. The supply chain crisis impacting defence has been further exposed by the Russia-Ukraine conflict, accelerating the depletion of Western stockpiles and intensifying global competition for strategic mineral supplies.
Understanding the Defence-Critical Minerals Crisis
The Strategic Importance of Critical Minerals
NATO identified 12 defence-critical raw materials in December 2024: aluminum, beryllium, cobalt, gallium, germanium, graphite, lithium, manganese, platinum, rare earth elements (REEs), titanium, and tungsten. These minerals aren't merely industrial components—they form the backbone of modern military hardware, from jet engines and missile guidance systems to advanced electronic warfare capabilities.
China's dominance in this sector is staggering, controlling between 60-90% of global processing capacity for many of these critical minerals. This concentration of power creates significant strategic vulnerability for Western defence industries, particularly as China has demonstrated willingness to weaponize this advantage.
The recent Chinese export restrictions on gallium and germanium—essential components in military-grade semiconductors—have sent shockwaves through Western defence supply chains. These restrictions represent a calculated geopolitical move rather than simple trade policy, directly threatening NATO countries' ability to maintain military readiness.
How the Russia-Ukraine Conflict Exposed Western Vulnerabilities
The ongoing conflict in Ukraine has served as a stark wake-up call for Western nations regarding their critical mineral dependencies. As military aid continues flowing to Ukraine, Western stockpiles of munitions and equipment have depleted at alarming rates, revealing the fragility of defence supply chains.
A controversial minerals deal between the US and Ukraine aims to reduce this dependence by leveraging Ukraine's substantial reserves of titanium, REEs, lithium, and gallium. However, developing these resources in a war-torn country presents enormous challenges.
The conflict has transformed from a regional dispute into a catalyst for global resource competition, with major powers racing to secure mineral supplies essential for maintaining military advantages. This new "resource war" may ultimately prove as consequential as the physical conflict itself.
Why Is Tungsten Critical for Modern Defence?
The Military Applications of Tungsten
According to a September 2024 US Government Accountability Office report, tungsten is essential for armor-piercing munitions and missile systems. With a melting point of 3,422°C (the highest of any metal) and exceptional density (19.25 g/cm³), tungsten provides capabilities that few other materials can match.
The mineral is required for manufacturing all calibers of munitions from artillery shells to small caliber ammunition. Specifically, tungsten carbide penetrators are critical components in 120mm armor-piercing fin-stabilized discarding-sabot (APFSDS) rounds used in modern tank warfare, including the M829A4 tank ammunition.
Tungsten's role extends to drone-deployed weaponry, where its high density and hardness enable precision strikes with minimal payload size. The metal's unique properties make it virtually irreplaceable in various penetrator applications across the modern battlefield.
China's Dominance in the Tungsten Supply Chain
China controls approximately 85% of global tungsten supply, leaving Western nations in a precarious position. The US has almost no domestic tungsten production, with all active mines having ceased operations by 2023 due to economic pressures and environmental regulations.
Over the past three years, US tungsten imports came primarily from China (27%), Germany (14%), Bolivia (8%), and Vietnam (8%). This dependency creates a strategic vulnerability that military planners cannot ignore.
According to Lewis Black, CEO of Almonty Industries, "China's strategy with tungsten is to starve Western consumers." This assessment aligns with the GAO's 2024 report classifying tungsten as "high-risk for supply chain disruption" for US defence capabilities.
How Is Gallium Reshaping Military Electronics?
The Strategic Role of Gallium in Defence
Gallium serves as a critical component in advanced radar systems, missile guidance, and electronic warfare equipment. A 2024 Center for Strategic and International Studies report warned about severe disruptions stemming from China's export restrictions, noting gallium's irreplaceable role in military-grade semiconductors.
Defence analysts have identified 3,800 distinct military applications for gallium, primarily in the form of gallium nitride (GaN) semiconductors. These components offer 5x higher power density than traditional silicon and can operate at temperatures up to 300°C, making them ideal for battlefield conditions.
The US maintains only a small stockpile of gallium with no domestic production, creating an acute vulnerability. Military systems containing gallium include the F-35 Lightning II radar, Patriot missile defence systems, and next-generation electronic warfare platforms.
The Global Gallium Supply Crisis
China accounts for more than 98% of global gallium production, giving Beijing unprecedented leverage over Western defence manufacturers. Chinese export restrictions imposed in 2024 have severely impacted production schedules at major defence contractors, with some programs facing 18-24 month delays.
Alternative sources exist in Ukraine and Greenland but remain underdeveloped. US Critical Materials recently reported high concentrations of gallium (180-385 parts per million) at its Sheep Creek project in Montana, which could potentially meet 15% of Department of Defense needs by 2028, according to company CEO Harvey Kaye.
The gallium crisis exemplifies how mineral dependencies have become central to geopolitical competition. Western nations now race to develop domestic sources, with the Pentagon allocating $213 million in 2024 for gallium-focused exploration and processing technology development. Rio Tinto's gallium breakthrough in transforming bauxite waste could potentially provide another avenue for Western supply.
What Is China's Strategic Approach to Critical Minerals?
China's Long-Term Resource Strategy
Between 2019 and 2024, China invested $33.9 billion (239.19 billion yuan) in mining-related foreign direct investment projects. This massive investment reflects decades spent establishing control over critical mineral supply chains, with a particular focus on securing access to lithium, graphite, nickel, and cobalt.
China's approach combines vertical integration (controlling everything from mine ownership to processing facilities to end-user contracts) with strategic depth. While Western companies focus on quarterly profits, Chinese entities implement decades-long mineral security strategies with state backing.
The export restrictions imposed on gallium and germanium represent just one facet of a broader strategy. By controlling processing capabilities rather than just raw materials, China has created choke points that cannot be quickly circumvented, regardless of where minerals are initially mined.
Impact on Western Defence Industries
Chinese-dominated minerals are used in artillery rounds, advanced radar systems, and virtually every major weapons platform currently in production. The export restrictions have created significant supply disruptions, with defence contractors reporting component delivery delays of up to 24 months.
Western manufacturers are scrambling to find alternative sources, but developing new mines and processing facilities typically requires 7-10 years and billions in investment. This timeline creates an immediate vulnerability that cannot be quickly addressed.
According to GlobalData analyst Aidan Knight, "China's export restrictions target 78% of defence manufacturing inputs." This strategic leverage may prove more consequential than traditional military advantages, as it affects the very ability to produce advanced weapons systems.
Is the US-Ukraine Minerals Deal a Game-Changer?
The Potential of Ukraine's Mineral Resources
Ukraine possesses vast reserves of titanium (6.8 million tons), REEs (1.4 million tons), lithium, and gallium. The proposed deal aims to reduce Western reliance on Chinese minerals by converting military aid debt into mineral concessions through a joint venture profit-sharing model.
US President Donald Trump publicly acknowledged the critical minerals focus in February 2025, noting that "Ukraine's resources are essential to American security." The agreement could leverage billions in military aid into long-term economic and security benefits for both nations.
If successfully implemented, this partnership could create a significant alternative supply source for Western defence industries. However, the timeline for development remains a major concern, with most projects unlikely to reach production stage for 5-7 years minimum.
Challenges and Limitations of the Deal
Developing mine sites in a war-torn nation will take significant time and faces enormous security challenges. According to GlobalData analyst Aidan Knight, "It is unlikely that a mineral deal with Ukraine will be able to secure a stable supply of critical minerals to meet expanding defence and energy transition needs quickly."
The Ukrainian infrastructure requires a 17-year development timeline by most estimates, particularly for the specialized processing facilities needed to convert raw materials into defence-grade components. Additionally, the risk of Russian sabotage remains high, with mineral sites representing prime targets.
Geopolitical implications could further destabilize the region, particularly as Russia views mineral resources as strategic assets. The deal has already prompted Russian officials to designate Ukrainian mining operations as legitimate military targets, complicating security arrangements.
How Are Western Nations Responding to the Crisis?
Recent Policy Initiatives and Investments
In March 2025, President Trump signed an executive order invoking emergency powers under the Defense Production Act. The order directs federal agencies to identify mines for quick approval and expedites permitting processes for critical mineral projects, reducing typical timelines from 7-10 years to 3-5 years.
The Defense Advanced Research Projects Agency (DARPA) launched the Open Price Exploration for National Security program to develop AI-driven prediction models for critical mineral markets. Charles River Analytics received a $4.5 million DARPA contract to build these probabilistic models, aimed at identifying supply vulnerabilities before they affect weapons production.
Legislative initiatives in Congress have allocated $1.7 billion for domestic mining incentives, including tax credits for processing facilities and streamlined environmental reviews for projects deemed essential to national security. These measures represent the most significant mining legislation since World War II. Furthermore, Trump's policies reshaping commodity markets have intensified focus on domestic production.
The "Mine-to-Magnet" Strategy
The Department of Defense is spearheading a comprehensive approach to develop a fully domestic rare earth supply chain. This "mine-to-magnet" strategy focuses on establishing end-to-end control from resource extraction to finished products.
The initiative aims to eliminate dependence on foreign processing capabilities, particularly for REEs used in precision guidance systems. With $817 million in funding, this program represents one of the most ambitious initiatives to secure critical mineral independence.
Private-public partnerships form the core of this approach, with companies like MP Materials receiving DoD contracts to establish domestic processing capabilities. The company's Mountain Pass facility in California aims to process 38,000 tons of rare earth oxides annually by 2026, potentially meeting 15% of global demand outside China.
What Are the Future Implications for Global Security?
The New Resource War
Critical minerals have become a central battlefield in great power competition, with control of these resources potentially determining military superiority more than traditional metrics like troop numbers or weapons systems.
Western nations remain highly vulnerable to supply disruptions despite growing investments. Current DoD estimates suggest achieving even 50% supply chain independence would require at least a decade and investments exceeding $35 billion.
According to Lewis Black, "We are trying to break that addiction [to Chinese supply] because… like all addictions, it is unhealthy." This dependency creates strategic vulnerabilities that adversaries can exploit, potentially neutralizing Western military advantages without firing a shot.
Long-Term Strategic Considerations
The defence industry has never been more dependent on the mining sector, creating a paradigm shift in how military planners must approach strategic planning. Securing critical mineral supply chains is now a national security imperative equal to traditional military investments.
Western nations must accelerate domestic production and processing capabilities while diversifying supply sources through strategic partnerships. The creation of a "minerals NATO"—a formal alliance focused on resource security—has been proposed as one potential framework.
The race for critical minerals will significantly influence geopolitical alignments over the coming decades. Nations with mineral resources may gain outsized influence, while those dependent on imports will face increasing strategic constraints on military and economic options. Australia's contribution through initiatives like the $2.5 million critical minerals grant and the CEFC's investment in the minerals sector demonstrates how allied nations are mobilizing to address the supply chain crisis impacting defence.
FAQ: Critical Minerals and Defence Supply Chains
What are the most critical minerals for defence applications?
NATO has identified 12 defence-critical raw materials: aluminum, beryllium, cobalt, gallium, germanium, graphite, lithium, manganese, platinum, rare earth elements, titanium, and tungsten. Tungsten and gallium are particularly crucial for modern weapons systems, with rare earth elements essential for precision guidance systems and advanced electronics. Titanium remains vital for aircraft construction and armor applications.
How has China established dominance over critical mineral supply chains?
China's dominance stems from decades of strategic investments in mining operations worldwide, combined with development of extensive domestic processing capabilities. Between 2019-2024 alone, China invested $33.9 billion in mining-related foreign direct investment projects. This long-term strategy has enabled China to use strategic export restrictions as geopolitical leverage against Western nations when advantageous.
What immediate steps can Western nations take to reduce critical mineral vulnerability?
Western nations can invoke emergency powers to expedite domestic mining and processing development, establish strategic stockpiles of the most critical materials, develop partnerships with friendly nations possessing mineral resources, and invest in recycling technologies to recover critical minerals from existing products. The Defense Production Act offers a framework for accelerating these initiatives in the United States.
How long would it take to establish independent Western supply chains?
According to industry experts, full independence could take decades, though some immediate relief is possible through strategic partnerships and stockpiling. Mining development typically requires 7-10 years from discovery to production, even with expedited permitting. Processing facilities can take 3-5 years to establish at commercial scale, creating a significant gap between current vulnerability and future security.
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