Engineers are addressing a supply chain limitation that appears in their procurement paperwork as a flag on specific rare earth magnet components in the basement of a defense contractor’s Virginia plant. The actual magnets are tiny. They don’t serve that purpose. The U.S. military relies on them for guidance systems, radar components, and communications technology, and China provides the majority of the refined material needed to make them function. For years, this has been the case. The flag has been there for many years. The supply chain solution that was meant to fix it is still not entirely functional.
China’s hegemony in the extraction and processing of rare earth elements did not emerge overnight. Chinese rare earth processing became economically competitive with everything the rest of the world could produce because to a planned, multi-decade approach that combined state investment in extraction and refining capacity with tolerance for the labor and environmental circumstances. China was processing between 85 and 90 percent of the world’s rare earth elements by the time Western governments began looking closely at the supply chain vulnerability. This isn’t because China has the only deposits, but rather because it built and subsidized the processing infrastructure that turns ore into usable material at a scale that no other country could match.
This strategy’s subsea extension applies the same reasoning to a different geographic area. Over several decades of careful institutional involvement with the International Seabed Authority, China’s state-backed exploration program, which operates through COMRA, has amassed international seabed exploration contracts throughout the Pacific, Indian Ocean, and Atlantic.
Chinese state entities were obtaining exploration rights to seabed tracts containing cobalt-rich ferromanganese crusts, polymetallic nodule fields, and seafloor massive sulfide deposits while Western mining companies argued whether deep-sea mining was commercially feasible and environmental organizations argued it should be banned. These contracts create priority positions in places that will be crucial if and when commercial extraction becomes feasible, but they do not yet authorize extraction because the ISA’s commercial mining code is yet unfinished.
Although the rare earth elements in seafloor deposits differ from those in ores on land, the strategic rationale for limiting access to them is the same. High quantities of cobalt, nickel, and tellurium, as well as rare earth elements, are found in cobalt-rich crusts on Pacific seamounts. These elements can be found in supply chains for clean energy technologies. The nations in charge of rare earth supply chains for electric vehicles are also in charge of those for missile guidance systems and satellite electronics due to the similar demand profiles of defense and green technology manufacturing. This confluence is not coincidental. This is one of the reasons why, however belatedly, the governments of the United States and Europe have viewed China’s strategic approach to these materials as a national security issue.
The response from the West has been coming in bits and pieces. The EU Critical Raw Materials Act, which was passed in 2024, set goals for lowering reliance on a single source for essential minerals and established procedures for expeditiously approving mining projects in the country and its allies. The Critical Minerals and commodities Strategy of the U.S. Department of Energy outlined goals for developing domestic and related supply chains that might lessen reliance on commodities processed in China. There is substance in both documents. Neither has yet developed the seabed exploration positions in the water or the processing capacity on the ground that would significantly reduce the supply chain vulnerability.
The asymmetry in tempo is important. For thirty years, China has been strengthening its position in critical minerals and rare earths. In response, Western businesses and governments are developing plans that will result in significant supply chain diversification in five to 10 years. That schedule is ambitious and contradicts the fact that developing rare earth processing capacity needs capital commitments, community acceptance, environmental permits, and technical know-how that cannot be willed into existence in a hurry. Both the competitive seabed exploration program that would grant Western interests a stake in subsea mineral access comparable to what China has amassed through patient institutional engagement and the rare earth magnet facility that would lessen that defense contractor’s vulnerability in the Virginia supply chain are not built overnight.
