Pentagon pushes domestic rare earth magnet production

Every cruise missile, every fighter jet, every missile defense interceptor, and every military helicopter flying today depends on a class of magnets so powerful and so small that the weapons systems built around them would be unrecognizable without them. For most of the past two decades, almost all of those magnets came from China. Two contracts quietly awarded by the Pentagon’s logistics agency on May 26 are part of a determined effort to change that.

The Defense Logistics Agency, the Department of War’s supply chain arm responsible for keeping every branch of the military stocked with the materials they need to operate, awarded parallel contracts totaling nearly $26 million to two American companies for neodymium-iron-boron magnet blocks, the specific type of rare earth permanent magnet that underpins modern defense electronics. E-VAC Magnetics, operating out of Sumter, South Carolina, received just under $12.9 million. Noveon Magnetics, based in San Marcos, Texas, received an almost identical sum. Both orders cover delivery through May 2027, and both are designated for use by all five branches of the U.S. military: the Army, Marine Corps, Navy, Air Force, and Space Force.

Neodymium-iron-boron magnets, universally abbreviated NdFeB in the industry, are the strongest permanent magnets commercially produced. A piece of NdFeB material the size of a golf ball can generate a magnetic field strong enough to lift hundreds of pounds, and its properties make it irreplaceable in applications where size, weight, and power density matter most. Military uses are extensive and span virtually every major weapons category. The actuators that move control surfaces on fighter jets and missiles use them. The motors in torpedoes and underwater drones use them. The precision guidance systems in smart bombs rely on them. Radar warning receivers, electronic warfare pods, communications equipment, night vision systems, and targeting sensors all incorporate NdFeB magnets in quantities that add up quickly across a fleet of thousands of aircraft and tens of thousands of vehicles and weapons systems.

China has dominated global NdFeB magnet production for decades, leveraging its control of rare earth mineral mining and processing to capture an estimated 85 to 90 percent of world output. For American defense procurement, this created a dependency that military planners have identified as a critical vulnerability for years. In October 2025, Beijing escalated that vulnerability into an active threat when China’s Ministry of Commerce announced its strictest rare earth and magnet export controls to date, explicitly targeting companies affiliated with foreign militaries and stating that requests to use rare earths for military purposes would be automatically rejected. Starting December 1, 2025, that policy took effect, effectively cutting Chinese-origin rare earth magnets out of the U.S. defense supply chain by regulatory fiat.

The legislative response to this dependency had already been building before China’s latest restrictions. The National Defense Authorization Acts for fiscal years 2023 and 2024 both included provisions tightening restrictions on Chinese-origin magnets in defense applications. Under Defense Federal Acquisition Regulation Supplement rules, contractors were prohibited from delivering end items containing NdFeB magnets produced in China, Russia, Iran, or North Korea, with the ban applying in two phases, the first covering finished magnets and the second, effective in 2027, extending to the underlying materials. The Pentagon’s 2024 National Defense Industrial Strategy set a formal goal: a complete domestic mine-to-magnet rare earth supply chain capable of meeting all U.S. defense needs by 2027, a timeline that is now directly pressure-tested by China’s export controls.

E-VAC Magnetics is the U.S. subsidiary of VAC, a German permanent magnet manufacturer with deep expertise in high-performance magnetic materials. The Sumter facility, which received nearly $100 million in U.S. government funding and broke ground in 2023, shipped its first domestically produced NdFeB magnets for commercial use in late 2025, employing more than 300 workers at a site that was a soybean field less than three years earlier. The facility’s establishment marks the return of rare earth magnet manufacturing to American soil at a meaningful industrial scale, though analysts have consistently noted that domestic capacity still falls far short of total U.S. demand.

Both contracts were awarded as sole-source acquisitions, meaning the Defense Logistics Agency bypassed competitive bidding and contracted directly with each company without soliciting competing offers. The legal justification cited in the contract documentation covers situations where only one responsible source exists and competition would be inadequate, a category that accurately describes the state of domestic NdFeB magnet manufacturing: the United States has exactly two operational producers, and the Pentagon needs product from both of them.

The parallel structure of the awards, two companies receiving nearly identical contract values for the same product at the same time, reflects a deliberate dual-sourcing strategy rather than administrative coincidence. Maintaining two independent domestic suppliers, even in a market where both are operating near their production ceilings, gives the military supply chain redundancy against disruption at either facility and creates a competitive incentive structure that a single-source monopoly would eliminate. Given that the alternative source for these magnets is now effectively closed off by Chinese export policy, the value of that redundancy has never been higher.

The $26 million total across both contracts is modest relative to the scale of the dependency problem it is attempting to address. The U.S. currently imports roughly 40,000 metric tons of NdFeB magnets annually, with the overwhelming majority historically sourced from China. Domestic production capacity remains a small fraction of that volume, and closing the gap will require years of continued investment in facilities, workforce training, and raw material processing.