Overview
- Reporting on Monday, July 27, 2026 shows the United States still lacks the processing and magnet-manufacturing capacity needed to meet the January 1, 2027 DFARS ban on sourcing covered minerals from China, Russia, Iran or North Korea.
- The DFARS rule will bar defense contractors from buying certain rare earths and magnets from those countries unless a narrow waiver is granted, and a recent executive order tightened waiver criteria for contractors.
- Industry and consultancy data put the scale of the gap in stark terms: U.S. demand for the most common rare-earth magnet was about 48,000 metric tons in 2025 while domestic supply that year was roughly 300 metric tons and projected U.S. magnet capacity is only about 5,000 metric tons by year-end.
- The administration has mobilized funding, Pentagon loans and a $12 billion stockpile program called Project Vault but officials have said they may initially buy minerals from anywhere in the world, including China, to keep defense production running.
- China controls more than 80% of global rare-earth refining and magnet production, and long lead times, technical refining hurdles, low global prices and permitting hurdles mean U.S. projects face delays that could keep the supply short and complicate policy incentives to re-shore the supply chain.