Companies that mine, process, refine, or trade critical minerals entering the U.S. defense supply chain, and the manufacturers and defense contractors that source those minerals as inputs. This page covers both sides of the transaction: what processors must document to sell into the defense market, and what buyers must verify to remain compliant with the regulations governing what they can procure.
China dominates the production and processing of most minerals critical to U.S. defense systems. It accounts for roughly 60% of rare earth mining, 90% of rare earth processing, 98% of primary gallium production, and is the leading global producer of 30 out of 44 minerals on the USGS critical minerals list. That concentration means the regulatory burden on everyone in the critical minerals supply chain, from the mine to the finished magnet or semiconductor, is growing rapidly. For processors and refiners, the compliance question is whether their sourcing, ownership structure, and processing operations are documentable to a standard that U.S. defense buyers will accept. For buyers, the question is whether they can trace what they are actually receiving all the way back to the mine, not just to their tier 1 supplier. The January 1, 2027 expansion of DFARS mine-to-product traceability requirements makes both questions urgent now, not in 2027.
The primary regulatory framework for rare earth and specialty material compliance in defense contracts. Through December 31, 2026, the restriction covers the melting, alloying, and all subsequent production phases of NdFeB and SmCo magnets, tantalum, and tungsten from covered countries (China, Russia, North Korea, and Iran). Effective January 1, 2027, the restriction expands dramatically to cover the entire supply chain from mining through finished product for these materials. A contractor delivering a defense system with magnets that were mined, refined, separated, melted, or produced in a covered country will be in violation, even if the finished magnet was assembled outside that country.
DFARS 225.7018-2Separate from the magnet-specific rule, this restriction applies to specialty metals including titanium, zirconium, hafnium, niobium, tungsten, and their alloys. Defense contractors may not acquire these metals if melted or produced in covered countries. The restriction applies to all tiers of the defense supply chain and has been in effect for years, but enforcement and documentation expectations are tightening as the broader minerals compliance framework expands.
The FY 2026 NDAA added additional critical minerals to the DoW covered materials regime under 10 U.S.C. 4872, with phased restrictions on sourcing from covered countries. It also introduced a new battery-related prohibition tied to foreign entities of concern and created structured opportunities for industry input, including a defense industrial base working group and a voluntary public compliance certification repository. Prime contractors and subcontractors at all tiers are expected to map supply chains through mining, refining, and separation stages and identify all materials now subject to DFARS restrictions.
Establishes a rebuttable presumption that any goods produced wholly or in part in China's Xinjiang Uyghur Autonomous Region, or by entities on the UFLPA Entity List, are made with forced labor and prohibited from U.S. import. The August 2025 FLETF strategy update designated lithium as a high-priority enforcement sector alongside copper, rare earths, and graphite. CBP scrutinizes sub-tier sourcing, chain-of-custody documentation, and processing location across all these materials. A supplier outside Xinjiang that processes Xinjiang-origin feedstock remains subject to the presumption. Generic supplier certifications, form letters, and basic invoices are explicitly insufficient in high-priority sectors. Clear and convincing evidence of clean sourcing is required.
DHS UFLPA FAQComprehensive and targeted sanctions programs cover Russia, Iran, North Korea, and others, with relevance to mineral supply chains wherever Russian or Iranian entities are involved in mining, processing, or trading strategic materials. The SDN List is updated multiple times per week. Any transaction with a sanctioned entity or in a comprehensively sanctioned jurisdiction creates serious legal exposure for both processors and buyers. FAR 52.225-13 requires OFAC compliance to flow down to all subcontracts.
China has systematically converted its upstream dominance in critical minerals into a formal export control and licensing mechanism. Current controls in full effect include restrictions on heavy rare earths (imposed April 2025), and permanent controls on tungsten, tellurium, bismuth, molybdenum, and indium. Controls on gallium, germanium, antimony, and certain rare earth compounds are suspended until late November 2026 under a bilateral trade arrangement, but the prohibition on exports to U.S. military end-users was never suspended. China's export control architecture is expanding: new dual-use licensing requirements were added in January 2026. Companies should not treat any suspended restriction as a reliable long-term supply guarantee.
Mineral processors, refiners, and traders with connections to BIS Entity List companies are restricted counterparties for U.S. buyers. The BIS Affiliates Rule, suspended through November 9, 2026, will when reinstated automatically subject any entity 50% or more owned by an Entity List company to the same restrictions as the named entity. For rare earth and specialty mineral supply chains, where Chinese state-linked ownership is frequently obscured through holding structures and variable interest entities, this rule substantially expands the universe of restricted counterparties beyond what the Consolidated Screening List reflects.
BIS Affiliates Rule announcementA separate and older regime from the magnet-specific DFARS rule, the Berry Amendment and the specialty metals clause require that certain metals used in defense articles be melted or produced in the United States or qualifying countries. Covered specialty metals include titanium, zirconium, hafnium, niobium, tungsten, nickel alloys, and their alloys. The restriction applies to all tiers of the defense supply chain and has been in effect for decades. As DFARS sourcing requirements expand under successive NDAAs, processors and buyers must track both the specialty metals restriction and the newer covered materials regime, since a material that is compliant under one framework may not be compliant under the other. For example, a samarium-cobalt magnet that uses compliant specialty metals may still violate DFARS 252.225-7052 if the samarium or cobalt was mined or processed in a covered country.
10 U.S.C. 4863Signed March 2025, Executive Order 14241 invokes the Defense Production Act to accelerate domestic critical mineral production, streamline federal permitting for priority mining projects, and direct the U.S. International Development Finance Corporation to establish a dedicated mineral production fund using DPA authorities. The National Energy Dominance Council, chaired by the Secretary of the Interior, oversees implementation. For domestic miners and processors, EO 14241 is both a regulatory signal and a contracting opportunity: it directs the Secretary of Defense to convene buyers and end-users of critical minerals to develop bid requests for domestic supply, and it unlocks DPA Title III funding that DoW has used to award approximately $439 million since 2020 to reestablish domestic rare earth supply chains. Understanding the entity vetting, provenance documentation, and compliance requirements attached to DPA-funded contracts is essential for processors seeking to access this capital.
DPA Title IIIThe National Defense Stockpile, managed by the Defense Logistics Agency, is the federal strategic reserve of materials needed for national defense. It covers copper, nickel, lithium, antimony, and 16 rare earth elements, among others. DoW announced intent to procure up to $1 billion in stockpile materials in 2025, and the One Big Beautiful Bill Act appropriated an additional $2 billion to the National Defense Stockpile Transaction Fund. For miners and processors, NDS procurement contracts represent a significant and growing contracting opportunity, but they carry sourcing documentation, entity vetting, and provenance requirements consistent with the broader DFARS covered materials framework. A 2019 law also prohibits NDS sales to certain adversary nations, and DoW does not currently have a reliable mechanism to verify buyer affiliations, creating compliance exposure for downstream recipients of stockpile-origin materials.
The Section 45X Advanced Manufacturing Production Credit, originally established under the Inflation Reduction Act, provides a 10% tax credit for domestic extraction, processing, and recycling of critical minerals including lithium, nickel, cobalt, and rare earths. The One Big Beautiful Bill Act, signed July 2025, modified the credit in two important ways. First, it imposed strict China guardrails: no credit is available for any eligible component that includes inputs or support from a prohibited foreign entity, defined to include entities under the influence or control of China, Russia, North Korea, or Iran. Second, the credit begins phasing out in 2031 and is fully eliminated for minerals produced after 2034. For domestic processors and miners, the guardrail requirement means that input sourcing must be clean of prohibited foreign entity involvement to qualify for the credit, adding a compliance dimension to tax planning. Ownership tracing and entity screening of feedstock suppliers is now a prerequisite for credit eligibility, not just a regulatory obligation.
IRS Advanced Manufacturing Production CreditIn effect
DFARS 252.225-7052 Phase 1: Melting/production ban
Covered countries (China, Russia, North Korea, Iran) may not be the source of melting, alloying, or any subsequent production phase for NdFeB or SmCo magnets, tantalum, or tungsten supplied in DoW contracts. Recycled-material pathways available under limited exceptions.
In effect
DFARS 252.225-7009: Specialty metals restriction
Defense contractors may not acquire specialty metals (titanium, zirconium, hafnium, niobium, tungsten, and their alloys) that are melted or produced in covered countries. Applies to all tiers of the defense supply chain.
In effect
OFAC SDN List: Updated multiple times per week
Any transaction with a Specially Designated National or entity in a comprehensively sanctioned jurisdiction is prohibited. Mineral processors, traders, and buyers must screen all counterparties continuously. Russian and Iranian entities relevant to mineral supply chains are frequently added.
In effect
UFLPA: High-priority sectors include lithium, copper, rare earths
The August 2025 FLETF strategy update designated lithium, copper, and additional minerals as high-priority enforcement sectors alongside rare earths and graphite. CBP scrutinizes sub-tier sourcing, chain-of-custody documentation, and processing location, not just mine of origin.
Nov 27, 2026
China gallium/germanium/antimony export suspension expires
China suspended its comprehensive export ban on gallium, germanium, antimony, and related materials until November 27, 2026. The prohibition on exports to U.S. military end-users was never suspended. When the suspension expires, companies without alternative sourcing face potential supply disruption. The export-control architecture is expanding, not contracting.
Jan 1, 2027
DFARS 252.225-7052 Phase 2: Full mine-to-product traceability
The restriction expands from melting/production to the entire supply chain: any covered material mined, refined, separated, melted, or produced in a covered country, or any end item manufactured in a covered country containing a covered material, is prohibited. For NdFeB magnets, this means tracing neodymium, iron, and boron from mining through finished magnet production. For SmCo magnets, the chain extends from cobalt and samarium ore or feedstock through finished magnets.
Jan 1, 2027
FY 2026 NDAA: Additional covered materials added
The FY 2026 NDAA expanded the DoW covered materials regime to include additional critical minerals subject to sourcing restrictions from covered countries, with phased timelines. Prime contractors and subcontractors at all tiers must map supply chains through mining, refining, and separation stages and identify all materials subject to DFARS restrictions.
2026 (pending)
H.R. 3617: Securing America's Critical Minerals Supply Act
Passed the House February 2026. Requires the Department of Energy to assess vulnerabilities and capacity constraints across critical mineral supply chains and develop domestic and allied sourcing strategies. Signals continued legislative expansion of domestic sourcing mandates.
Ongoing
China export controls on rare earths and critical materials
China's export control architecture continues to expand. Heavy rare earth restrictions imposed in April 2025 remain fully intact. Permanent controls on tungsten, tellurium, bismuth, molybdenum, and indium are in effect. New dual-use licensing requirements covering rare earth compounds were added January 2026. Companies should not treat any suspended controls as a guarantee of continued access.
Trace mineral sourcing from extraction through refining, separation, alloying, and finished product to document compliance with DFARS Phase 2 mine-to-product traceability requirements. Covers NdFeB and SmCo magnets, tantalum, tungsten, and expanded covered materials under the FY 2026 NDAA.
Screen processors, traders, refiners, and sub-tier suppliers against OFAC SDN, BIS Entity List, UFLPA Entity List, and 1260H Chinese Military Companies lists. Map ownership structures through Mandarin-language corporate registries to identify covered-entity connections that do not appear in English-language sources.
Produce chain-of-custody documentation tracing mineral inputs through all processing stages to support CBP rebuttal requirements. Covers lithium, rare earths, graphite, cobalt, copper, and other FLETF high-priority sectors. Generic supplier certifications are not sufficient; SolidIntel provides the sourcing evidence CBP requires.
Monitor developments in China's expanding export control architecture, including changes to licensing requirements for gallium, germanium, antimony, rare earths, and other strategic materials. Identify supplier relationships that create exposure when suspended controls reinstate.
Verify the ownership structure and entity relationships of mineral processors and refiners, where Chinese state-linked capital is most commonly obscured through holding structures, variable interest entities, and nominee shareholders.
Generate timestamped, citation-backed reports documenting supply chain provenance and entity screening results in the format DoW contracting officers and DFARS compliance auditors expect.
Supplier relationships and entity designations change. SolidIntel monitors your mineral supply chain in real time and escalates new risk flags as OFAC, BIS, and UFLPA entity lists update.
The National Defense Authorization Act includes provisions that restrict dealings with Chinese military companies (Section 1260H) and prohibit procurement of telecommunications equipment from covered entities (Section 889).
Prohibits importation of goods produced wholly or in part in the Xinjiang Uyghur Autonomous Region, placing the burden of proof on importers to demonstrate their supply chains are free of forced labor.
Prohibits transactions with designated individuals, entities, and jurisdictions across OFAC, EU, UK, and UN sanctions lists — requiring continuous screening of counterparties, suppliers, and beneficial owners.
Multiple U.S. mandates require mapping and de-risking critical mineral supply chains — rare earths, lithium, cobalt, graphite — to reduce dependence on adversarial nations for defense and critical infrastructure applications.
Establishes supply chain due diligence and reporting obligations for companies sourcing strategic raw materials in the EU, targeting concentration risks — particularly single-source dependencies on China.