Trump Pressures Defense Supply Chain to De-China! Lockheed Martin Turns to U.S. and Canada for Critical Minerals

Lockheed Martin (LMT-US), the world's largest defense contractor, is in talks with mining companies in the United States and Canada to procure two critical minerals, aiming to build a more secure supply chain for the F-35 fighter jet, Patriot missile interceptors, and other weapons systems as U.S. President Trump pushes to reduce dependence on China.

According to two sources cited by Reuters on Tuesday (April 4), Lockheed Martin is negotiating with NioCorp Developments to procure scandium, and separately discussing germanium supply with Teck Resources and 5N Plus. These minerals are widely used in aircraft components, infrared sensors, and other military equipment.

If agreements are finalized, this would mark a significant step toward establishing a domestic critical minerals supply chain in the U.S. However, Chinese suppliers have long enjoyed price advantages, and U.S. mining and processing capacity remains limited, making price and contract duration key negotiation hurdles.

Last month, President Trump signed an executive order tightening the conditions under which defense contractors can obtain exemptions. Previously, companies could use exemptions to purchase minerals from China and other restricted foreign suppliers; under the new rules, defense firms like Lockheed Martin face greater pressure to support U.S. mines through long-term procurement agreements.

NioCorp to Supply Up to a Quarter of Global Scandium Demand

Sources revealed that Colorado-based NioCorp has signed a preliminary agreement with Lockheed Martin to supply 15 metric tons of scandium annually, though both parties still need to finalize a formal contract.

Scandium is one of 17 rare earth elements and is used to manufacture lightweight, corrosion-resistant alloys suitable for military aircraft. The metal will be supplied from NioCorp’s mine in Nebraska, which is expected to begin operations before 2028 with an annual production capacity of approximately 100 metric tons.

The U.S. Geological Survey (USGS) estimates that current global scandium demand is around 60 metric tons per year and is steadily increasing. Thus, the 15 metric tons sought by Lockheed Martin would account for roughly a quarter of global demand—an impressively large volume.

Mark Smith, CEO of NioCorp, said both companies recognize the importance of scandium to future U.S. defense technology. Lockheed Martin stated it supports NioCorp’s efforts to establish a domestic U.S. source of scandium. The two companies previously collaborated through a Pentagon-funded research program.

The U.S. has not mined scandium since 1969. Currently, Rio Tinto Group is the only scandium producer in North America, with an annual production capacity of only about 9 metric tons, highlighting that U.S. efforts to rebuild its supply chain are still in the early stages.

Germanium Supply Focused on Canada; Price Remains Negotiation Challenge

Lockheed Martin is also negotiating with Teck Resources to procure germanium. This metal is used in manufacturing infrared sensors and other military equipment, and the U.S. currently imports more than half of its germanium demand.

Teck Resources mines and produces zinc and germanium concentrate at its Red Dog mine in Alaska, then ships the concentrate to British Columbia, Canada, for smelting and separation of the two metals. The company does not disclose germanium output separately but claims to be the largest producer in North America and the fourth-largest globally. USGS estimates global annual germanium demand at around 60 metric tons and rising.

Additionally, Lockheed Martin is discussing germanium supply with Quebec-based 5N Plus. Earlier this year, 5N Plus received Pentagon funding to process germanium in Utah using recycled feedstock. Sources said negotiations have been ongoing for over a year, with Lockheed Martin most concerned about long-term supply security and wanting to confirm whether raw materials originate from China or elsewhere.

However, disagreements remain between Lockheed Martin and Teck Resources and 5N Plus over pricing and contract terms. Teck Resources declined to comment on specific commercial agreements but said it has agreed to work with the Canadian government to expand germanium processing capacity in British Columbia.

Chinese mineral prices have long been lower than Western products, reflecting differences in mining practices, regulatory standards, and cost structures. Although the U.S. has dozens of critical mineral projects in development, its mining and processing capacity still lags far behind China. Whether the Trump administration’s push to de-Chinese the defense supply chain will succeed ultimately depends on whether Western nations can bear higher costs and build large-scale domestic production capacity.