In September 2022, Lockheed Martin stopped delivering F-35 fighter jets. Not because of a design flaw. Not because of a parts shortage. Because inspectors found a tiny magnet inside a turbomachine pump — and the alloy in that magnet came from China.

The jets sat on the tarmac for weeks. Engineers tested every component. The Pentagon had to get a national security waiver just to start shipping them again. One small part. One wrong country of origin. And the most advanced fighter on Earth couldn't leave the factory.

That episode looked like a one-time mistake. A new report from Sprott Asset Management says it was a warning. By 2030, the U.S. Department of Defense will need around 10,000 tonnes of rare earth magnets a year — roughly three times what it uses now. The problem is that total magnet production outside China is only 20,000 to 25,000 tonnes. So the Pentagon alone could eat up nearly half of everything the non-Chinese world makes.

That math gets worse when you zoom out. China refines 91% of the rare earths that go into magnets. It makes 94% of the finished magnets. And it only mines about 60% of the raw ore. Which means even countries that dig the stuff out of the ground still send it to China to get it refined.

"A new mine does little to strengthen supply security if its output must still be sent to China for processing or magnet manufacturing," Sprott's Justin Tolman wrote this week. Which is why Washington isn't just funding mines anymore. It's paying to build the entire chain — separation, metals, alloys, magnets — on American soil.

The numbers are real. The Pentagon agreed to a $110-per-kilogram price floor for MP Materials' neodymium-praseodymium products and guaranteed buyers for its planned Texas magnets for a decade. USA Rare Earth is targeting 10,000 tonnes of annual magnet output between South Carolina and Oklahoma. Since 2020, the Pentagon has put close to $1 billion into rare earth projects at home.

That's happening against a bigger backdrop. Global defense spending tops $2.7 trillion a year. NATO has classified rare earths among twelve defense-critical raw materials and pledged to raise military spending to 5% of GDP by 2035. Wars now run on drones, guided missiles, radar, and electric actuators — all of which need magnets. The demand is only going one direction.

Sprott puts it plainly: "Identifying a resource as strategic does not make every project economic. Some projects will require government support to proceed." That's the awkward truth. The Pentagon can't wait for markets to sort this out, but it also can't fund everything. The winners will be companies that control a real position in the chain — a mine, a separation plant, a magnet factory. And they'll need to prove they work without permanent life support.

The question is speed. China built its grip over thirty years. The Pentagon is trying to buy its way out in five.

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Ionic Rare Earths and Missouri-based US Strategic Metals signed a 50-50 joint venture to build a magnet recycling campus near Fredericktown, Missouri. USSM is putting up $95 million of the $100 million total for a 1,800-acre site with full permits already in hand. The plant will take dead neodymium and samarium-cobalt magnets and pull the rare earths back out as separated oxides. Ionic brings its Belfast-developed recycling technology under a non-exclusive license. Recycling old magnets is faster and cheaper than digging new ones out of the ground.

Arafura Rare Earths told investors on its FY2026 earnings call that the Nolans project in Australia's Northern Territory is fully funded. More than A$930 million raised. Backers include Export Finance Australia and the German Raw Materials Fund. Construction starts this month on a 37-month build — the first mine-to-oxide rare earth operation in Australia, targeting 4,440 tonnes a year of NdPr oxide. Offtake deals in five countries. Government-backed debt from five countries.

Hallgarten's September resources review, written by Christopher Ecclestone, argues that government money is propping up rare earth stocks. Too many companies can't survive on their own, and promotional language like "world-class" is masking weak economics. REEx partly agrees: a deposit doesn't become valuable just because Washington calls it strategic. But the sector is splitting into winners and pretenders, not collapsing as a group. Lynas made A$222 million in net profit this year and Neo posted $57 million in adjusted EBITDA in Q2 — real earnings from real production. REEx calls this the "Strategic Sovereignty Premium" — the gap between pure economics and what governments will pay when supply security is a national priority.

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Neodymium metal, praseodymium metal, and the NdPr alloy benchmark all fell together in September — down 2.54%, 2.37%, and 1.98%. That's the first time the whole complex moved down as a block since May. The spread between Nd and Pr held steady rather than widening. That pattern says this is a broad pause in the rally, not a single-element story. Meanwhile, holmium oxide was the month's big gainer, up 7.14%.

— Rare Earth Mining News / SMM data

The Chinese Society of Rare Earths is holding its 2026 Annual Academic Conference in Suzhou, October 23–26. It spans 28 tracks, from geology to AI-driven materials discovery — covering mining, separation, magnets, superconductors, batteries, hydrogen, and policy in one event. An accompanying exhibition covers high-purity metals, production equipment, and talent recruitment. That's one conference linking the whole supply chain in one room.

— Rare Earth Exchanges

Nordique Critical Metals filed a preliminary economic assessment for its Kwyjibo rare earth project in Quebec and is working to earn up to an 80% interest in the deposit. The PEA report was submitted on SEDAR+ in late August and addresses community concerns about the project's environmental footprint.

— GlobeNewswire

VanEck's Rare Earth and Strategic Metals ETF closed at $76.16 as of September 3. That's up just 3.71% year to date. The fund sits closer to its 52-week low of $57.17 than its high of $111.55. Total net assets stand at $2.24 billion.

— VanEck