US action in Iran exposes critical minerals weakness
Weapons stock depletion may not ultimately decide the outcome of the Iran-US conflict, but it could certainly play a major role.An integral part of the current offensive in Iran is the US’s Patriot and terminal high altitude area defence (THAAD) missile defence systems. The supply of these interceptors has been severely depleted in recent years due to US intervention in the Middle East and the ongoing conflict in Ukraine.During the 12-day conflict between US, Israel and Iran in June 2025, the US used more than 150 THAAD missiles, according to the Centre for Strategic and International Studies (CSIS). Though exact US defence stock levels are classified, this represents more than a quarter of stockpiles based on estimates reported by the CSIS.These attacks came after the US had already expended a significant amount of missile interceptors during the previous year as it defended against Houthi attacks on shipping in the Red Sea.Between 2020 and 2025, the US has supplied Ukraine with about $45.1b worth of military aid that included an extensive number of Patriot systems and munitions, further exhausting its stockpiles, according to the Council of Foreign Relations.By launching its most recent offensive in Iran, the US is expected to further deplete its military reserves.US Secretary of State Marco Rubio says Iran is producing more than 100 missiles each month.“Compare that to the six or seven interceptors that can be built a month,” he said.“The objective of this mission is the destruction of ballistic missile capabilities and naval capabilities.”This may forecast a major issue for the US, as supply chains of minerals and metals critical to the production of these military assets — including rare earth elements (REEs) and gallium — remain dominated by China.The International Energy Agency (IEA) estimates that China accounts for about 61% of rare earth production, as well as 92% of processing, and more than 98% of global gallium production.On February 27, the day before the US offensive on Iran commenced, the US Government put out a request to domestic miners asking how fast they could develop mines to produce tungsten and 12 additional elements, Reuters reported.During last year’s US-China trade war, Beijing nearly crippled global industry supply chains when it cut off the export of gallium and other rare earths. China’s introduction of tighter export controls on minerals with dual civil-military uses further exacerbated global trade pressures.As the latest strategic push to reduce reliance on battery materials from China, the US Department of Commerce announced anti-dumping and countervailing duties on selected Chinese anode producers, an element integral to military equipment, pushing the total tariff minimum to about 103%, according to the US Federal Register.With US and Chinese trade negotiators slated to meet mid-March, China may once again be able to leverage its monopoly on these critical industries and capitalise on the urgency the US is facing to bolster its military systems.Given that China has openly condemned the US’ actions in Iran, trade negotiations may be tense.Chinese Foreign Ministry Mao Ning says the US-Israeli strikes on Iran violate international law.“China is deeply concerned over the regional spillover believes that the sovereignty, security and territorial integrity of the Gulf states should likewise be fully respected,” she said.“China firmly opposes the use of force in international relations or infringement on other countries’ sovereignty and security.”US President Donald Trump is set to visit China between March 31 and April 2 to meet with Chinese President Xi Jinping. It will be the first trip by an US president since President Trump’s visit in 2017.Though there has been a global effort to diversify supply chains outside of China, including the framework signed between the Australia and the US last October, change does not happen overnight.The US is not the only country feeling the rising critical minerals pressure.In response to escalating global instability, North Atlantic Treaty Organisation (NATO) defence member countries have set a goal to increase defence spending to 5% of their GDP by 2035, a substantial increase on the 2% benchmark established at the 2014 Wales Summit.A new report from S&P Global, Critical minerals briefing December quarter 2025, found that even under a conservative scenario, NATO defence spending could rise substantially through 2035, intensifying supply risks for NATO’s defence-critical minerals.Since 2015, NATO defence expenditure has increased 40%, according to S&P Global.Global defence spending in FY25 alone rising 2.5% from the previous year to $3.73t , according to the International Institute for Strategic Studies (IISS).Even under a conservative 3% GDP cap, NATO’s 2026–35 defence expenditures could increase 40%, driving a substantial rise in demand for these critical minerals, according to S&P Global, and the minerals most at risk of supply disruptions include gallium and REEs.Australia has also seen significant increases to its defence expenditure with the Federal Government estimating Australia’s defence budget for FY26 to be $59b, representing a 4.2% nominal increase on the previous year.Though not a NATO member, Australia is considered an ally for its strong ties with member nations — and its pipeline of critical minerals projects are positioned to be crucial for developing resilient and self-sufficient critical minerals supply chains.
