PAYNE INSTITUTE COMMENTARY SERIES: COMMENTARY

By Alex Gilbert, Matt Isler, and Morgan Bazilian

September 29, 2026  (revised 10/5/2026)

In August 2025 the U.S. Geological Survey released a model that ran more than 1,200 trade-disruption scenarios through 84 mineral commodities and 402 U.S. industries, then ranked each commodity by the damage a one-year supply cut would do to the economy. First place went to samarium, a rare earth that sold for an estimated $2.82 per kilogram in 2025 according to the 2026 USGS Mineral Commodity Summaries. That number is an Argus free-on-board quote for oxide of at least 99.5 percent purity, and buyers outside China may well have paid more once Beijing began licensing exports in April 2025. To be fair, oxide is a few steps away from samarium metal, samarium-cobalt alloy, a finished magnet, and a component qualified for use in a weapon.

The technical report calculated the probability-weighted cost to U.S. GDP of losing samarium at nearly $4.5 billion in 2023 dollars, more than for any other commodity studied, which shows how poorly price and tonnage track military importance. About four-fifths of that loss comes from two industries, guided missile and space vehicle manufacturing and search, detection, and navigation instrument manufacturing. Almost all of it traces to a single scenario, a halt in Chinese shipments, which the USGS weighted at 100 percent probability because Beijing had already placed samarium under export restrictions when the analysis was run.

Alloyed with cobalt, samarium forms permanent magnets that keep their strength at temperatures too high for many neodymium-iron-boron magnets. In July 2026 National Defense Magazine repeated a widely circulated figure of up to 50 pounds of samarium-cobalt magnets in each F-35. Although we can’t confirm that number, it gives a useful sense of scale.

A common-mode failure

Producing high-purity samarium oxide takes many rounds of solvent extraction, and turning that oxide into metal for magnets. Neodymium and praseodymium have seen fast-growing demand from electric vehicles and industrial motors. Samarium serves a small, specialized market that gives private investors little reason to pay for spare capacity outside China.

In April 2025 China’s Ministry of Commerce and General Administration of Customs issued Announcement No. 18, which requires export licenses for samarium metal, samarium alloys including samarium-cobalt, samarium-cobalt permanent magnet materials, samarium oxide, and other samarium compounds and mixtures. The one-year suspension Beijing granted in November 2025, which runs until November 10, 2026, applies to a broader package announced that October and leaves the April controls in force. In December 2025 the Commerce Ministry confirmed that it had begun approving general licenses, which permit repeat shipments to pre-approved buyers, for some Chinese exporters. Beijing therefore holds a working legal instrument that reaches nearly every stage between separated samarium and finished magnet material, and it has already used it.

On September 7, 2022, the Pentagon and Lockheed Martin disclosed that F-35 deliveries had been halted after it emerged that a magnet in a Honeywell-built turbomachine used a samarium-cobalt alloy from China, a potential breach of defense acquisition rules. Officials concluded that the magnet posed no risk to the aircraft, yet deliveries did not resume until Under Secretary of Defense William LaPlante signed a waiver in October, and the contractors moved to a different source for the alloy. Lockheed Martin said the alloy had come from a fifth-tier supplier, far below the level at which a prime contractor normally tracks.

The non-Chinese chain

Under an agreement announced in November 2025, Solvay produces samarium oxide at La Rochelle in France, Less Common Metals in Britain converts it to metal, and Permag uses the metal in high-performance magnets made in the United States. Solvay says the arrangement is meant to cover demand over the next three to five years. USA Rare Earth completed its purchase of Less Common Metals in November 2025, and in July 2026 it signed definitive agreements to take a stake of about 13.6 percent in Carester, a French rare earth separation and magnet-recycling company. Much of Carester’s senior technical team came out of the Rhône-Poulenc and Rhodia rare earth business that Solvay absorbed when it bought Rhodia in 2011, and the two companies signed a partnership memorandum in 2024.

Solvay opened a new rare earth line at La Rochelle in April 2025 and began commercial production for the permanent-magnet market. MP Materials has been stockpiling a heavy rare earth concentrate containing samarium, europium, and gadolinium at Mountain Pass, California, since late 2023, and plans to move to samarium once its dysprosium and terbium circuit is running, a sequence it ties to its 2025 agreement with the Pentagon. The company reported reaching mechanical completion of that first circuit in May 2026 and has since begun commissioning it, and management told an investor conference in August that samarium is targeted for early 2028. Lynas Rare Earths reported its first samarium oxide from its Malaysian plant on March 19, 2026, ahead of its own April forecast. At the metals stage, the Defense Logistics Agency has contracted Terves, a REalloys subsidiary, to design a modular U.S. plant for converting samarium and gadolinium into metal. Reuters valued the two-phase award at up to $1.7 million, and the company says the design targets capacity of 300 tons a year.

A plant in an allied country that could ship samarium during a war is worth far less to the Pentagon than one already qualified, under contract, cleared for export, and able to surge, and none of these projects has reached that point.

Reserves and price support

The proposed Annual Materials Plans for the National Defense Stockpile in fiscal 2025 and fiscal 2026 each listed 60 metric tons of samarium-cobalt alloy as a potential acquisition. The Federal Register notices describe each listed quantity as a ceiling on what the Defense Logistics Agency may buy, sell, convert, or otherwise handle in a year and state plainly that the figures are not targets. Neither plan says how much samarium-cobalt the stockpile already holds, and the Congressional Research Service has noted that stockpile requirements are set using classified scenarios and data.

A strategic reserve should be sized by time to effect, meaning the months of priority production the inventory can sustain, the conversion steps that would still limit output, and how quickly stored material can become qualified hardware. This would require holding material at several stages of the chain, with the mix set by shelf life, conversion lead times, qualification requirements, commonality across platforms, and expected wartime demand.

Complex supply chain mapping is needed to highlight competing interests, because a samarium shortage would hit missile and navigation-system production at the same time. In a small market where defense is the main buyer, commodity prices will not keep spare production capacity in business, so the government will have to find ways to fund it.

ABOUT THE AUTHORS

Alex Gilbert
Founder and Principal & Field Director, Rocinante Fieldworks
Alex Gilbert is an interdisciplinary researcher and entrepreneur working across energy policy, nuclear technology, and frontier infrastructure. He is the founder and Principal & Field Director of Rocinante Fieldworks, an advisory and venture platform focused on developing emerging industries in advanced energy, space, maritime systems, and strategic resources. Previously, Alex served as Vice President of Regulation at Zeno Power, where he led regulatory and safety efforts for commercial space and maritime nuclear power systems. At the Nuclear Innovation Alliance, he worked on advanced reactor commercialization and regulatory reform.

Alex holds a Master’s and PhD in Space Resources from the Colorado School of Mines, where his doctoral research examined the technical, regulatory, and governance foundations of astronaut nuclear safety. He also holds a Master of Energy Regulation and Law and a Certificate in Climate Law from Vermont Law School, and a bachelor’s degree in Environmental Studies and International Relations from Lake Forest College. Alex is a nonresident fellow at the Payne Institute for Public Policy at the Colorado School of Mines researching energy and climate policy, critical minerals, and space governance. His work has appeared in Nature Climate Change, Energy Policy, and the Journal of Space Safety Engineering, among other journals.

Matt Isler
Matt Isler is a retired Air Force brigadier general and fighter pilot who currently serves in the defense industry. Matt commanded an F-15 squadron and a training wing, and was a deputy commander for land forces in Iraq and a deputy commander for air forces in the Middle East. He is a Fellow at the Payne Institute.

Morgan Bazilian
Director, Payne Institute and Professor of Public Policy, Colorado School of Mines
Morgan Bazilian is the Director of the Payne Institute and a Professor of public policy at the Colorado School of Mines. Previously, he was lead energy specialist at the World Bank. He has over two decades of experience in the energy sector and is regarded as a leading expert in international affairs, policy and investment. He is a Member of the Council on Foreign Relations.

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