America’s critical minerals defense-industrial challenge

ABOUT THE AUTHOR: Guy Kioni is the critical minerals initiative fellow at the Cambridge Middle East and North Africa Forum and CEO of Missang, a geostrategy and management consultancy firm.

In 1967, President Richard M. Nixon, in his now infamous article in Foreign Affairs, argued that America could not afford to leave China “outside the family of nations.” Five years later, he traveled to Beijing to begin the delicate process of bringing China into the international system, declaring in a remarkably prescient way that “this was the week that changed the world.”

More than half a century later, President Donald Trump last month met with Xi Jinping in Washington, with decades-long consequences of the 1967 opening to China in the background. While Nixon sought to bring China into a now established American-led order, Beijing has since upended that balance of power; Washington’s industrial capacity is more dependent than ever on Beijing for the materials and manufacturing need to continue projecting American strength globally.

Adequate concern has already been expressed over China’s dominance of critical-mineral supply chains. International Energy Agency estimates report that China accounts for more than 90% of global refining for a range of critical materials, including gallium, graphite and manganese. While securing critical minerals featured high on the list of the recent summit’s priorities, the underlying challenge will be the extent to which America can reclaim control over the upended foundations of its industrial power.

The challenge emanating from China is not simply a supply question. The more significant challenge is found further downstream, where America’s industrial base requires vast processing and manufacturing capacity to turn gallium into semiconductor chips and rare earth elements into magnets for missile guidance systems. And while a reduced dependence on Chinese mining may be the outcome of the summit, America will remain vulnerable if processing and component manufacturing, alongside supplies, remain concentrated elsewhere.

The notion that the United States needs to beat China at its own industrial game overlooks America’s comparative advantage. This lies elsewhere in technology, innovation and private capital. According to the most recent Stanford AI Index Report, American private AI investment reached a whopping $285.9 billion, surpassing the $12.4 billion invested by China by 23 times. The United States, hosting more AI data centers than any other country, produced 59 notable AI models, almost double that of China.

The strategic opportunity for Washington is therefore not to replicate China’s industrial system. This is a system built, in part, on lower labor costs and extensive state direction, subsidies and preferential financing. This has enabled industrial scale at the expense of market competition and innovation. Washington must instead exploit the advantages of its own economic model, namely private capital, competition and technological innovation.

That potential, when leveraged correctly, is already apparent in the defense sector. The ongoing war with Iran has demonstrated the scale of the challenge facing America’s industrial base. A Congressional Budget Office analysis found that the United States has expended between half and two-thirds of its inventory of several key missile-defense interceptors since the conflict began. A Center for Strategic and International Studies analysis put the toll on Patriot inventories specifically at roughly 65% and on THAAD at about 38%; CBO estimates rearmament will take at least five years.

Ukraine has provided a stark demonstration of the risk of America’s defense industrial base not being able to replenish stocks quickly enough. In August, CNN reported that a Ukrainian Patriot launcher remained unused for six weeks because its unit was out of interceptors. The Patriot unit’s chief engineer, Dmytro, told CNN, “This is a really heartbreaking sight when you have equipment but you’re not able to intercept any missile.” President Volodymyr Zelenskyy similarly told the broadcaster that Ukraine needed approximately 5% of the U.S. Patriot interceptor stockpile to survive the winter but had access to a mere 1%.

The American military, although the world’s most sophisticated, is nevertheless constrained by the speed at which it can manufacture. This is precisely where America’s technological advantage need be applied as a means of transforming industrial processes.

A new generation of American companies has been applying AI, advanced software and automation to the defense-industrial base. Hadrian and Machina Labs represent distinct approaches to using technology to make military production faster and more scalable. Hadrian is using AI, software and robotics to automate the production and inspection of precision-machined components. Rather than competing with China by replicating labor-intensive manufacturing models, the company, now valued at $8 billion, is using technology to make highly skilled manufacturing more automated and scalable. The company signed an MOU with America’s largest defense company, Lockheed Martin, to apply this model to components for systems including PAC-3 MSE, THAAD and PrSM.

Machina Labs offers another example, using AI-driven robotics to produce complex aerospace and defense components more rapidly than conventional manufacturing methods. In July 2026, the company announced that Lockheed Martin had awarded it a qualification contract for an assembly supporting the JASSM missile program

The Trump-Xi meeting offered an occasion to draw a common thread between these issues. Focusing only on whether China will permit American companies to buy critical minerals risks treating a potential dependency as a commercial supply problem. The more important question is how the United States can leverage its own strategic advantages, technological leadership, entrepreneurship and innovation, to more effectively, and in its own uniquely American way, rebuild much needed resilient industrial capabilities.

In 1972, Nixon went to Beijing to bring China into the international system, believing that integration would shift the balance of power in America’s favor. In 2026, the task is reverse: disentangling American industrial power from a system China has come to dominate, without abandoning what has always been America’s distinctive strength: its capacity to innovate. This will inevitably be translated into the industrial capacity to sustain American power when it is most needed.