Why Access to Critical Raw Materials Is Becoming a Defense Issue

For many critical raw materials, the key question is no longer price but availability. TRADIUM's experts explain why competition for supply is intensifying and what that means for industry and defense.

Governments across Europe, the United States, and Asia are increasing military spending. At the same time, export controls, geopolitical tensions, and supply chain disruptions continue to affect the availability of critical raw materials. TRADIUM's experts Jan Giese and Brian Hendrich explain the latest market developments and share their assessment of the challenges facing defense supply chains.

What has been the most significant recent development in the critical raw materials market?

Jan Giese, Head of Sales & Trading at TRADIUM: The markets for rare earths and many minor metals have become very tight. One of the most significant recent developments has been China's increasingly selective use of export controls. Earlier this year, Beijing banned exports of critical raw materials to Japanese customers deemed capable of enhancing military capabilities. While exports of some materials have partially resumed in recent months, Japan still faces the risk of being cut off from supplies over the longer term as export controls remain highly selective and politically driven. The trend has become even more pronounced in recent months. China has expanded its export control measures by adding further Japanese and US companies to its exports control lists. Since the end of July, 14 companies from the EU have also been added to the list. This further reinforces the impression that access to critical raw materials is being used more openly as a geopolitical tool.

Which materials are under the greatest pressure today?

Brian Hendrich, Market Analyst at TRADIUM: The most sensitive materials include germanium, gallium, heavy rare earths such as dysprosium and terbium, yttrium, hafnium, tungsten, and samarium-based materials. For several of these metals, prices have already risen significantly. Germanium is used in infrared optics and advanced sensors, while gallium is critical for advanced semiconductors. Heavy rare earths such as dysprosium and terbium are essential for high-performance permanent magnets that must operate at high temperatures, a common requirement in military systems.

Why do published market prices often tell only part of the story?

Jan Giese: Yttrium illustrates how tight some markets have become. Once priced at only a few dollars per kilogram, prices multiplied significantly since. It is used to coat metals subjected to prolonged heat and stress, for example on turbine blades. More broadly, published price ranges do not always reflect the difficulty of procuring meaningful physical volumes. Small lots may still be obtainable at or near quoted market levels, while larger quantities can command substantial premiums, longer lead times or may simply not be available at all. In practice, physical and practical availability are not always the same. The challenge is often not simply obtaining material, but obtaining qualified material whose provenance, documentation, and logistics satisfy today's procurement requirements.

How are defense companies responding to these supply chain challenges?

Brian Hendrich: Defense companies increasingly treat critical raw materials as part of defense readiness rather than standard procurement line items. The key shift is that physical security of supply — not just price exposure — is now the priority. Interest in strategic stockpiling, long-term supply agreements, alternative non-Chinese sources, recycling routes, and qualification of secondary materials continues to grow. Long-term offtake commitments are now the single most important key to unlocking mining finance. Without a customer willing to sign a ten-year contract, mines do not get built. As a result, securing future access to critical raw materials is increasingly becoming part of defense preparedness itself.

Who is best placed to secure these materials?

Jan Giese: What we clearly observe is that U.S. buyers and Japanese buyers often move faster and more decisively than many European industrial consumers when strategic materials become available. U.S. companies have spent several years adapting to tighter supply conditions, supported by government funding, stockpiling efforts and long-term procurement initiatives. Japanese companies also benefit from a mature national framework for critical minerals. European companies, by contrast, often move through longer procurement and approval processes. As a result, competition is increasingly not about who is willing to pay the highest price, but about who is willing and able to commit first.

What risks does this pose for European defense companies?

Brian Hendrich: European companies face multiple compounding risks: dependence on Chinese-controlled refining and separation capacity, uncertainty regarding export controls, long qualification cycles, limited visibility into upstream supply chains, and competitive disadvantage relative to better-capitalized US buyers. The risk is not always an immediate complete shortage. More often, companies face delayed deliveries, higher premiums, incomplete documentation and ongoing uncertainty around future licensing.

What is the biggest misconception about critical raw materials today?

Jan Giese: Today, the challenge is often less about knowing where material exists than about securing reliable access before someone else does.