Why Are Rare Earths Important to Energy and Defence?

Last updated: September 27, 2026

Rare earth elements sit at an unusual crossing point: the same handful of metals that make an F-35’s flight-control actuators work at 50,000 feet also make an offshore wind turbine’s generator spin without a gearbox, and make an electric-vehicle motor small enough to fit under a hood. That overlap is not a coincidence of chemistry alone — it is why a mining and refining bottleneck concentrated in one country has become both an energy-transition problem and a defence-procurement problem at the same time.

What Makes Rare Earths Different From Other Critical Minerals

“Rare earths” refers to 17 chemically similar elements, split into light rare earths (including neodymium and praseodymium) and heavy rare earths (including dysprosium, terbium and samarium). Despite the name, most are not geologically scarce — the bottleneck is refining and separation, not deposits. A small subset, the magnet rare earths (neodymium, praseodymium, dysprosium and terbium), drives the vast majority of commercial and military demand because they are used to make neodymium-iron-boron (NdFeB) permanent magnets, the strongest magnets commercially available.

China controls more than 70% of global rare earth mine production and, more importantly, over 90% of the world’s refining and chemical separation capacity, according to International Energy Agency data. That second figure matters more than the first: a mine can be opened in the United States, Australia or elsewhere, but converting raw ore into magnet-grade oxides still runs almost entirely through Chinese separation plants.

Where Rare Earth Magnets Show Up in Civilian Energy

Magnet rare earths are now a mainstream input to the energy transition, not a niche one. NdFeB magnets are used in EV traction motors and in the permanent-magnet generators fitted to direct-drive offshore wind turbines, where they let manufacturers skip a mechanical gearbox — a major advantage for reliability in a marine environment that is expensive to service.

The International Energy Agency projects magnet rare earth demand will keep climbing through the decade as EV sales and offshore wind capacity expand, which is precisely why the defence sector, competing for the same dysprosium and terbium-heavy magnet supply, has become impossible to separate from the civilian energy-transition story.

The Defence Side: What’s Inside an F-35

The Department of Defense’s own most-cited example of rare earth dependence is the F-35 Lightning II, which contains more than 400 kilograms of rare earth materials per aircraft. Neodymium and praseodymium are used in the flight-control actuator motors; dysprosium and terbium are added to those same magnets so they retain their strength at high operating temperatures; samarium appears in guidance-related components; and europium and erbium are used in cockpit displays and laser rangefinders. Beyond the F-35, rare earth magnets and rare-earth-doped components recur across radar arrays, sonar systems and precision-guided munitions — applications where magnet performance under heat and vibration cannot be substituted with cheaper alternatives.

That overlap in end use is the whole point of the crossover: a defence platform and an offshore wind farm are, at the materials level, drawing on the same narrow refining bottleneck.

China’s Grip on the Supply Chain and What Changed in 2025-2026

Beijing has used export licensing on rare earths as a lever repeatedly over the past two years, and the restrictions have specifically targeted the military-relevant end of the supply chain.

The practical effect, according to S&P Global and IEA reporting, has been a tightening of heavy rare earth availability outside China and a price run-up: praseodymium-neodymium oxide prices rose roughly 30% in the first quarter of 2026 alone, driven by tight mining quotas and aggressive procurement from Japanese buyers competing for the same limited non-Chinese supply.

Washington’s Response: Price Floors, Equity Stakes and New Plants

Since early 2026, the US government has shifted from subsidy programs toward direct financial stakes in rare earth producers — treating magnet supply as security infrastructure rather than an ordinary commodity market.

MP Materials and Lynas now sit in the same broader group of firms straddling the defence-energy line as the nuclear vendors covered in our overview of defence companies investing in energy technologies — the difference is that magnet producers supply a raw material both industries need, rather than a finished reactor or propulsion system.

These deals sit alongside broader federal moves: a Section 232 trade proclamation in January 2026 targeting processed critical mineral imports, a Department of Energy funding notice of up to $135 million for domestic rare earth supply chains, and “Project Vault,” a strategic critical-minerals reserve announced in February 2026 alongside an EXIM Bank direct-loan facility of up to $10 billion. None of these are purely defence programs — they are aimed at civilian magnet demand from EV and wind manufacturers just as much as at the Pentagon, which is exactly why they belong in an energy story rather than a purely military one.

Beyond Magnets: Other Critical Minerals Riding the Same Wave

Rare earth magnets are the highest-profile case, but they are not the only critical mineral where energy and defence demand now overlap. Uranium supply agreements, such as Niger and Atomic Eagle’s mining convention for the Madaouela project, feed both civilian reactors and naval propulsion fuel cycles. Nuclear component manufacturing is similarly mineral- and metallurgy-intensive, as shown by Škoda JS’s exclusive supply deal for Rolls-Royce SMR’s control rod drives. And on the battery side, the push toward sodium-ion chemistries is partly a deliberate move to reduce dependence on lithium, nickel and cobalt supply chains that carry some of the same geopolitical concentration risk as rare earth magnets, even though sodium-ion itself does not use rare earths. The same logic applies to the battery and fuel-cell power projects the US Army recently selected for six domestic installations: nickel, cobalt and lithium supply chains carry a smaller but analogous concentration risk to the one now driving rare earth policy.

What This Means for Energy Investors and Policymakers

For companies planning offshore wind, EV manufacturing or grid-scale electrification projects, rare earth magnet supply is no longer a background input cost — it is a planning variable with its own price floors, export-license risk and multi-year lead times, now shaped as much by defence procurement decisions in Washington as by mining output. The MP Materials and Lynas deals suggest governments are willing to guarantee prices well above pre-2025 market levels to build non-Chinese capacity, which should be read as a signal that magnet costs for both weapons systems and wind turbines are unlikely to fall back to historical lows even if Chinese export controls ease.

Frequently Asked Questions

Are rare earths actually rare?
Not geologically — most are found in workable concentrations in several countries. The scarcity is in refining and chemical separation capacity, over 90% of which is concentrated in China.

Why does China control so much of the rare earth supply chain?
Decades of state investment in mining, separation and processing infrastructure, combined with lower environmental compliance costs historically, let Chinese producers scale refining capacity that other countries did not build in parallel.

What rare earths does a fighter jet actually use?
The F-35 uses neodymium and praseodymium in actuator magnets, dysprosium and terbium to keep those magnets stable at high temperatures, samarium in guidance-related parts, and europium and erbium in displays and rangefinders, totaling more than 400 kilograms per aircraft.

Can the United States build a rare earth supply chain independent of China?
Mining and initial processing are advancing, notably through MP Materials’ Texas facilities, but full independence requires magnet-grade separation and finishing capacity that is still being built and is not expected at scale before 2028.

Do wind turbines and EVs really compete with weapons systems for the same materials?
Yes, at the level of magnet-grade neodymium, praseodymium, dysprosium and terbium. Direct-drive offshore wind turbines and EV traction motors are large-volume consumers of the same NdFeB magnet materials used in military actuators and guidance systems.

Sources

• IEA, “Global Critical Minerals Outlook 2026” — executive summary, iea.org
• IEA, “Rare Earth Elements” analysis — iea.org
• S&P Global Commodity Insights, “Rare earth supply bottlenecks set to persist in 2026,” January 27, 2026
• European Commission Joint Research Centre, “The Role of Rare Earth Elements in Wind Energy and Electric Mobility”
• MP Materials, “MP Materials Announces Transformational Public-Private Partnership with the Department of Defense,” 2026
• MP Materials / Investor Relations, “MP Materials Selects Northlake, Texas, as the Site of ’10X’,” 2026
• Center on Global Energy Policy, Columbia University SIPA, “MP Materials Deal Marks a Significant Shift in US Rare Earths Policy”
• China Briefing, “China’s Rare Earth Export Controls — Impact on Businesses and Industries”
• U.S. Department of Energy, “Energy Department Announces Actions to Secure American Critical Minerals and Materials Supply Chain”

Illustrative image. Photo: Tmy350, CC BY-SA 4.0, via Wikimedia Commons — source