The Pentagon [AFP=Yonhap News] 

The U.S. Department of Defense is pushing for a procurement project worth up to $1 billion (1.4 trillion won) to stockpile critical minerals essential for the defense industry, the Financial Times (FT) reported on the 12th (local time).

This measure comes in response to tightened export restrictions on various materials by China, which holds a dominant position in the critical minerals sector, and aims to reduce reliance on Chinese-led supply chains.

In particular, China has recently further intensified export controls on strategic minerals such as rare earths and related technologies. In response, U.S. President Donald Trump has warned that he would impose an additional 100% tariff on China.

Critical minerals are vital resources used in all weapon systems, radar, and missile detection technology. The U.S. Department of Defense considers these a top priority for stockpiling in the interest of national security.

According to the FT, this effort to strengthen mineral stockpiles is part of the Trump administration's broader critical minerals strategy and includes some metals that were not previously stockpiled.

Data from the Defense Logistics Agency (DLA), which operates under the Department of Defense, indicates that the minerals recently announced for procurement include up to $500 million in cobalt, up to $245 million in antimony, up to $100 million in tantalum, and up to $45 million in scandium. The agency is also considering the additional acquisition of rare earths, tungsten, bismuth, and indium.

Antimony. Reuters=Yonhap News. 

Commenting on this strategy, a defense industry executive stated, "The U.S. government recognizes the importance of critical minerals and intends to support domestic production capacity," adding, "While Western mineral stockpiling is still in its early stages, it is becoming increasingly focused."

The DLA currently maintains dozens of mineral types—including alloys, metals, rare earths, ores, and precious metals—in storage facilities across the country. As of 2023, the value of these assets is approximately $1.3 billion.

The Trump administration's tax cut bill, which serves as the basis for this procurement plan, includes a total budget of $7.5 billion to support critical minerals. Of that amount, $2 billion has been allocated as defense stockpile funds for the Department of Defense to execute between late 2026 and early 2027.

Furthermore, the tax cut bill allocates $5 billion for investments in critical mineral supply chains and $500 million for a Department of Defense credit program to incentivize private investment.

Some in the market are expressing concerns that the large-scale U.S. mineral stockpiling strategy could lead to supply chain overheating and sharp price spikes.

For instance, the U.S. Department of Defense is considering the acquisition of 222 tons of indium, a figure nearly equivalent to the entire U.S. annual consumption of 250 tons as of last year.

Kristina Belda, a researcher at commodity intelligence firm Argus Media, explained, "There are opinions in the market that it is unrealistic for the DLA to meet these procurement volumes within the proposed timeframe," adding, "Most of the requested volumes exceed total U.S. annual production and imports."

Yonhap News