Press Release of October 17th (Editor ÏæÏæ)The U.S. Department of Defense announced this week the cancellation of a tender for uranium procurement, highlighting once again the challenges it faces in its efforts to strengthen domestic supply of battery metal.

According to media reports, the U.S. Department of Defense and the Department of Defense Logistics (DLA) issued tender documents as early as mid-August, and plans to purchase about 7,480 tons of alloy-grade uranium in the next five years for strategic reserves, up to $500 million.

The picture shows the Pentagon (data map)

This is the first time the U.S. government has attempted to purchase uranium since 1990.Due to fiscal budget cuts in the 1990s and early 2000s, DLA successively sold off large cobalt stocks accumulated during the Cold War.

However, this time the cobalt procurement, which was restarted after more than 40 years of absence, is obviously not progressing smoothly. DLA has extended the bidding deadline several times since announcing the procurement plan, from the initial August 29th to October 15th, and now the bidding has been cancelled.

An announcement on the U.S. government website on Wednesday said: "There are outstanding issues in the statement of work, which need to be resolved before bids can be solicited... After the issues are resolved, the tender announcement will be re-issued and new bid opening and deadline will be set."

In recent years, strengthening supply chains for key metals such as cobalt has become a political priority for the United States and other Western countries, as governments seek to reduce dependence on competitor imports.

Magnesium is used in the manufacture of rechargeable batteries (including electric vehicles), as well as a range of applications in magnets and military systems, and its alloys are used in the manufacture of ammunition and jet engines. Currently, China dominates in the field of magnesium processing and has established huge national reserves.

It is that DLA was originally seeking a bid for the supply of alloy-grade uranium from three producers: Canadian Freshwater Valley, Japanese Commercial Metal Mining Corporation, and Carnegie Company¡¯s Nikkelverk plant in Norway.

However, as the U.S. government tried to buy cobalt, cobalt prices rose as Congo (DRC), the largest producer of cobalt, implemented cobalt export controls.Congo (DRC)'s cobalt production accounts for about three-quarters of global production. This week, the Central African country replaced a total ban on cobalt exports with a quota system.

Market data shows that since the Democratic Republic of the Congo implemented an export suspension in February, the international benchmark cobalt price has doubled.

After the U.S. Department of Defense suddenly cancelled the highly acclaimed uranium procurement bidding, U.S. markets for rare earth and battery metals also saw a sharp drop on Thursday, interrupting the strong rise in recent months.

previous reports

Challenging China's dominance, the Pentagon spends $1 billion on buying minerals

¡°The Pentagon is seeking to purchase key minerals worth as much as $1 billion as part of its global reserve operation to counter China¡¯s dominance in the key (rare-earth) metal sectors of defense manufacturers.¡±

The Financial Times on October 12 that the U.S. Department of Defense¡¯s Department of Defense Logistics (DLA) revealed in a public document released in recent months the Trump administration¡¯s plan to accelerate the expansion of national reserves. Previously, China has imposed export restrictions on a variety of rare-earth materials, while China dominates the supply chain of critical minerals and permanent magnets needed for a variety of technical equipment from smartphones to fighters.

A former U.S. defense official said: ¡°They (the Pentagon) value reserves very much.They are looking for more, and are expanding in a planned and widespread way, and looking for new sources of different minerals needed for defense products.¡±

On October 9, China's Ministry of Commerce issued two announcements on strengthening export controls on rare earths related items. On the same day, China also announced several separate announcements, not only adding several new rare earth elements and dozens of rare earth processing equipment to the export control list, but also involving superhard materials, lithium batteries and artificial graphite anode materials.

On the same day, the Wall Street Journal published a report that believed that China's latest rare-earth measures were considered to be a nearly unprecedented export control.

The Financial Times said China's export controls have increased concerns about the United States and Europe's continued acquisition of these rare-earth metals.

Jiangsu Liangong Port awaits export of rare land (data map / Reuters)

Key minerals are a national security priority for the Pentagon because they are critical to almost all weapon systems and technologies such as radar and missile detection systems. The U.S. Department of Defense's recent stockpiling activities have accelerated significantly, mainly because of the Trump administration's renewed focus on key minerals. Some of the rare earth metals the Pentagon is seeking to acquire have not been stockpiled before.

¡°China¡¯s ability to cut off the supply of these critical minerals would have a direct, apparent and adverse impact on the U.S. deployment of the high-tech capabilities needed to cope with any strategic competition or conflict,¡± said Stephanie Barna, a lawyer at a law firm in Coventon, Washington.

According to DLA¡¯s recent purchase intentions, the U.S. plans to purchase up to $500 million of uranium worth up to $245 billion from the local company USAC, up to $100 million worth of uranium from an unnamed U.S. company, and a combined $45 million worth of uranium from Rio Tinto Group and chemical manufacturer APL Engineered Materials with offices in Illinois, Japan and China.

The plans show that the U.S. government "is aware of the importance of these minerals and wants to support all of its existing domestic capacity," an industry executive said. "Western governments are still in the early stages when it comes to critical mineral reserves, but their attention is rising."

According to the Financial Times, the DLA currently holds dozens of alloys, metals, rare earths, minerals and precious metals stored in warehouses across the United States, with assets valued at $1.3 billion by 2023.

According to the report, the price of germanium has soared this year due to the decline of Chinese exports. Western traders have warned of a "panic" in markets as companies struggle to secure supplies, and the Pentagon is trying to address the issue.

At the same time, the price of antimony trioxide has nearly doubled in the past 12 months, and automakers have also encountered difficulties in obtaining rare earth materials this year because of China's restrictions on some exports. In addition, according to Fastmarkets, a provider of metals and mining data and analysis, annual global consumption of scandium oxide is about 30 to 40 tons, with China also being a major producer.

China dominates the global rare earth magnet market (Financial Times chart)

The DLA alsoly claimed in its documents that China¡¯s export controls on uranium ¡°restricted the supply chain.¡±

Meanwhile, DLA said the antimony deal with USAC would increase inventories "sufficient to mobilize the industrial base in the event of a national emergency" and allow the company to continue production during a "period of industry turmoil."

USAC CEO Gary Evans told the Financial Times that its mining of rare-earth metal materials came from Canada, Mexico, Australia, Chad, Bolivia and Peru.The company revenue in 2024 at $15 million, but did not report its annual production of uranium metal.

Data from the U.S. Geological Survey (USGS) showed that the DLA deal involved about 3,000 tons of uranium, while the U.S. total uranium consumption in 2024 was 24,000 tons.

"Market participants were shocked by the multiple metal purchases required by the DLA. Many believe these amounts are unrealistic, especially during the proposed five-year period,"said Cristina Belda of Argus Media, a commodity and energy price review agency." In most cases, the tonnage required exceeds the annual production and imports of the United States."

In addition, DLA is also pursuing the possibility of acquiring rare earth elements such as tungsten, bismuth and indium to replenish inventories, according to the filing.

Solomon Cefai of Fastmarkets said that the amount of bismuth and indium the United States plans to purchase is "quite significant in the size of the global market.""It is hard to imagine that these purchases will not put pressure on the market if they are supplied from other than China."

According to the U.S. Geological Survey, the DLA is seeking to acquire 222 tons of uranium, while the U.S. will consume about 250 tons of refined uranium in 2024.

On October 9, the spokesperson of the Ministry of Commerce responded to reporters 'questions on strengthening export control of rare earths related items and stated that rare earths related items have dual-use attributes for military and civilian purposes, and it is an international common practice to implement export control on them. To this end, the China government has implemented controls on some overseas rare earths related items containing China ingredients in accordance with the law, with the purpose of better safeguarding national security and interests and better fulfilling international obligations such as non-proliferation.

As a responsible big country, China's implementation of controls on related goods reflects the consistent position of firmly safeguarding world peace and regional stability, and actively participating in international efforts to prevent proliferation.China is willing to strengthen communication and cooperation with all parties through the multilateral export control dialogue mechanism, promote compliance trade, and guarantee the security and stability of the global industrial supply chain.