Rare Earth Wars: U.S. General Sounds Alarm Over China’s Military Leverage | OilPrice.com
Josh Owens
Josh Owens is the Content Director at Oilprice.com and a veteran energy journalist with over a decade of experience covering global energy markets and geopolitics.…
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By Josh Owens – Nov 12, 2026, 7:00 PM CST
On November 3, retired four-star General Jack Keane, the Army’s former Vice Chief of Staff, put a warning on the record: China “has made clear it is prepared to use [America’s] dependence as leverage.”
The dependence he’s talking about is America’s reliance on Chinese rare earths. And he didn’t say it from a cable news set.
He said it as a director of REalloys [NASDAQ: ALOY], the company the Army recently selected for exclusive negotiations to build a plant to process dysprosium and terbium on one of its own military bases.
And the timing couldn’t be more critical. According to U.S. Treasury Secretary Scott Bessent, the truce that has kept Beijing’s widest rare earth rules on hold now runs only until January 10, 2027.
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That’s just nine days after the Pentagon’s new magnet rules take effect.
In short, Keane is warning about a pressure tactic China has already used, and one it could use again this winter. And the Army is preparing as if that threat will be around for decades.
China Has Already Shown What It’s Willing to Do
Beijing has spent the last year and a half showing exactly what that leverage against America looks like.
In April 2025, it put seven rare earth elements under special export licenses, and dysprosium and terbium were on the list. Western factories felt the impact within weeks.
Ford CEO Jim Farley said the company “shut down plants for three weeks because we cannot get high power magnets.”
If a company the size of Ford couldn’t get the magnets it needed, it’s easy to see what the same shortage would mean for the companies building America’s weapons.
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Then, in October 2025, China went even further. Its new rules would have required Beijing’s approval to export even magnets made outside China if they contained trace amounts of Chinese rare earths, and they took direct aim at the military.
Under those rules, requests to use rare earths for military purposes “will be automatically rejected,” according to Gracelin Baskaran, director of the Critical Minerals Security Program at CSIS. She called the measures “a sharp escalation in Beijing’s long-running strategy to weaponize its dominance in rare earths.”
The truce between Washington and Beijing has kept those October 2025 rules on hold for now, but they could come back in place as soon as January 10, 2027.
And Beijing hasn’t waited on the truce to go after the defense industry.
On June 22, 2026, China’s Commerce Ministry banned exports of goods with military uses to 10 U.S. companies and organizations it tied to the American military, two of them U.S. rare earth companies.
It even barred anyone, anywhere in the world, from passing those Chinese goods along to them.
In other words, Beijing has moved past squeezing overall supply and is now picking which American companies get cut off. So, for American defense planners, the real question is not if, but when China will use that leverage next.
Why the Pentagon Can’t Build Without These Two Metals
Dysprosium and terbium aren’t household names, but the Pentagon can’t do without them. They go into the heat-resistant magnets inside radar and sonar, electric motors, and precision-guided munitions.
So, when the supply of those metals tightens, the companies building those weapons can end up waiting on Beijing just to keep their production lines running.
This is the vulnerability Keane, and the rest of the REalloys team, are pointing at. “For too long,” he said, “the United States has depended on adversaries and others for the materials inside its most advanced defense technology.”
And he spelled out what’s at stake. “Our ability to deter conflict, and to prevail if deterrence fails, depends on producing munitions and weapons systems at scale,” he said, “and that requires supply chains we control.”
Washington has now written that idea into its own rules. From January 1, 2027, defense contractors can’t deliver magnets containing materials from China, Russia, North Korea or Iran at any stage, from the mine to the finished magnet.
For big defense contractors like Lockheed Martin (NYSE: LMT) and RTX (NYSE: RTX), that deadline is now only weeks away, and you can’t simply build that kind of supply chain overnight.
What that means is the hardest thing to find in this market right now is processed metal with a paper trail that never touches China.
Why the Army Is Planning 75 Years Ahead
That’s exactly what the Army is trying to lock down at Tooele, and the length of the proposed deal says a lot.
The Army first named REalloys to a short list of four companies cleared to negotiate for critical mineral plants on Army land back in June. On November 3, <a href="https://finance.yahoo.com/energy/articles/realloys-u-army-execute-term-140000283.html" rel="nofollow noopener" target
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