A $24 billion fighter-jet deal starts much further down the supply chain
Saudi Arabia could soon add 48 Lockheed Martin (NYSE: LMT) F-35s to its air force under a proposed $24.3 billion package that also includes engines, equipment, spare parts and support.
On a simple value basis, that works out to roughly $506 million per aircraft, for the Saudi Arabian package.
Now compare that with one of the materials buried deep inside the aircraft.
The U.S. Defense Department says a single F-35 requires more than 900 pounds of rare earth elements. Across 48 jets, that is more than 43,000 pounds of rare earth material before considering replacement parts or the wider support network around the fleet.
The amounts are tiny compared with the value of the finished aircraft, but the jets cannot be built or perform as designed without them. Rare earth permanent magnets are used throughout advanced military systems to power motors, electronics, radar and other critical components.
The F-35 has already been caught in the China supply-chain problem
America’s dependence on foreign magnet supply is not a theoretical risk.
Lockheed Martin identified prohibited Chinese-made magnets inside the F-35 supply chain in 2023 and 2024. According to the U.S. Government Accountability Office, the Defense Department paused manufacturing for several months while alternative suppliers were identified and ultimately issued national-security waivers allowing some aircraft to be accepted.
One relatively small component was enough to disrupt production of one of the world’s most advanced fighter jets.
The rules become much stricter on January 1, 2027. Pentagon procurement restrictions will extend across the entire supply chain for neodymium-iron-boron and samarium-cobalt magnets sourced from China, Russia, Iran and North Korea, reaching back through mining, refining and separation before the finished magnet is produced. Certain exceptions and waivers remain, so this is not a blanket ban on every Chinese rare earth used anywhere in defense.
That deadline gives Washington little room to treat rare earth independence as a long-term ambition.
The defense buildout needs a mine-to-magnet supply chain
The F-35 is only one example. Rare earth magnets are also used in Tomahawk missiles, drones, radar systems and submarines. A Virginia-class submarine requires roughly 9,200 pounds of rare earth elements, according to the Pentagon.
Washington has been investing across the supply chain rather than simply funding new mines. The Pentagon wants domestic and allied capacity capable of separating rare earths, refining them into usable materials and eventually manufacturing finished magnets. It has specifically backed supplies of materials such as terbium, which improves the high-temperature performance of neodymium magnets used in aircraft, missiles and submarines.
This is where the rare earth opportunity becomes more selective. Owning a deposit is one thing. Becoming part of a supply chain that can meet U.S. defense sourcing rules after 2027 is considerably more valuable.
The proposed Saudi purchase shows just how much money can sit at the top of the defense industry. Forty-eight aircraft come with a package valued at $24.3 billion, yet their production still depends on relatively small quantities of materials buried several layers deeper in the supply chain.
The Pentagon can spend billions buying the finished weapons. Securing the rare earths that make those weapons possible may prove just as strategic.
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