The 2027 Cliff

Summary

Five findings

The cliff is real, but it is not where the draft put it. Magnet tonnage is not the constraint. The constraint sits upstream, in heavy rare earths, samarium and tungsten, where no contractor can fix supply in the 66 days left. [NPSI assessment]

I · The rule

Three instruments, three texts

The statute. 10 U.S.C. § 4872 bars the Department of Defense from acquiring covered materials melted or produced in a covered nation: China, Russia, Iran and North Korea. Covered materials are samarium-cobalt and neodymium-iron-boron magnets, tantalum metals and alloys, tungsten metal powder and tungsten heavy alloy. The FY2026 act added molybdenum at once, and gallium and germanium from 18 December 2027. [Source: Pub. L. 115-232 § 871, the FY2019 act; Pub. L. 119-60 § 844]

The upstream step. Section 844 of the FY2021 act would have reached back to material “mined, refined, separated” after five years. Section 854 of the FY2024 act changed five to six, which puts it on 1 January 2027. The FY2026 act then rewrote the instruction. From that date a new paragraph bars the Secretary from entering “into a contract for any covered material mined, refined, or separated in any covered nation.” [Source: Pub. L. 116-283 § 844; Pub. L. 118-31 § 854; Pub. L. 119-60 § 848]

The regulation. The DFARS clause in most contracts, 252.225-7052 of May 2024, carries the older wording, “mined, refined, separated, melted, or produced”, and turns on the delivery date. Clause 252.225-7961 (June 2026), issued under a class deviation revised on 1 July, turns on the award date, and it does not amend existing contracts by itself. A contract signed in 2025 with the older clause can still catch material delivered after 1 January; one law firm reads it as giving no general grandfather for inventory. [Source: 89 FR 46816, 30 May 2024; Pillsbury, 21 Oct 2026; Wiley, 24 Jul 2026]

The exceptions narrow. From 1 January a commercial off-the-shelf item escapes only if it is less than 50% covered material by weight; until now that test applied to tungsten alone. Mill products not yet in an end item, the bars, billets, slabs, plates and sheets, stay covered. The clause flows down to every tier, commercial items included. [Source: Pub. L. 116-283 § 844, as amended by Pub. L. 119-60 § 848; 48 CFR 225.7018-3]

Two clauses, one date, and a statute the regulation has not caught up with.

II · The calendar

Sixty-six days

The legal dates cluster inside a quarter. The supply that would answer them is spread across four years. Every arrival in the lower panel is a company target, and most sit after the date the rule takes effect.

Three dates in the first panel are not in the Pentagon’s control. Beijing’s notice suspending its October 2025 rare earth controls still expires on 10 November, though a September readout extended the wider trade arrangement to 10 January. Its pause on the December 2024 ban on gallium and germanium exports to the United States lapses on 27 November. No instrument extending either had been published at the time of writing. And the House’s FY2027 defence bill would repeal the upstream provision on the earlier of 31 December or enactment. [Source: MOFCOM Announcements 70 and 72, Nov 2025; MOFCOM, 28 Sep 2026; H.R. 8800 § 1803(c), 22 Jul 2026]

III · The order

The waiver becomes a plan

Executive Order 14415, Securing America’s Defense Supply Chains and Ensuring Domestic Acquisition of Critical Materials, was signed on 20 July and published three days later. [Source: 91 FR 46693, 23 Jul 2026]

Its centre of gravity is section 2. From 1 January the Secretary of War “shall cease to issue waivers” under § 4872(c)(1), the nonavailability exception. National security waivers under § 4872(e) follow the same terms, or need a request to the national security adviser. A waiver survives only where the Secretary accepts a contractor’s mitigation plan that documents exhaustive efforts and a timeline to phase out covered-nation material. Failure to qualify a domestic source “shall not constitute non-availability” unless the contractor shows “active, adequately funded, and ongoing efforts” to qualify one. [Source: EO 14415 §§ 2(a) to 2(c)]

Section 3 tells the rule-writers what to require: an indentured bill of materials traced to the origin of raw materials; vetting of suppliers for financial risk, foreign ownership, control or influence, and supply concentration; notice of significant risks within 15 days of vetting; and a confidential corrective action plan within 45. These bind no contractor until the regulations exist. Guidance is due around 16 January, the rules about 90 days later. [Source: EO 14415 § 3; Orrick, 1 Oct 2026]

The remedies are contractual: suspended task orders, declined options, termination, and referral to the Attorney General for fraud. The order does not mention the False Claims Act or debarment. That exposure appears in law-firm analysis, not in the text. [Source: EO 14415 §§ 2(d), 4; Orrick, 1 Oct 2026]

Section 6 leaves the government’s own channels alone: Project Vault, the $12 billion stockpile launched in February, and projects financed by EXIM or the DFC. In April, officials said Vault would first buy from “anywhere in the world,” China included. [Source: EO 14415 § 6; Reuters, 27 Jul 2026] The order tightens contractor sourcing and leaves the stockpile’s channel open. [NPSI assessment]

Congress may still move the floor. The House bill, passed on 22 July, rewrites § 4872 into a tiered regime and repeals the upstream bar on the earlier of 31 December or enactment. The Senate bill, reported but not passed, would push molybdenum to the gallium and germanium date. Neither is law, and the bill heads into a lame-duck session. [Source: H.R. 8800 § 1803; S. 4784 § 816; CRS IN12704]

IV · The draft, checked

Part one: the law

The draft, line by line

The draft that prompted this briefing circulated in October. Its frame holds; many particulars do not. Part one checks its legal claims against the enrolled law, the Federal Register and the clause text. Parts two and three check its industrial, energy and workforce claims.

Sources: Pub. L. 115-232, 116-283, 118-31, 119-60 (govinfo.gov); 89 FR 46816; 91 FR 46693; 48 CFR 225.7018 and 252.225-7052 (eCFR, Sep 2026). Clause 252.225-7961 and Class Deviation 2026-O0041 Rev. 1 are confirmed through law-firm alerts; the deviation memo itself could not be retrieved.

Part two: industry and money

Companies, plants and backlogs

Sources: CIC via HKEX, Jun 2026; SMM, May 2025; MP Materials NdPr specification; Energy Fuels, Jun 2024 and Jun 2026; Lynas ASX, 2021 to 2026; Reuters and electrive, Oct 2026; USA Rare Earth, 10 Aug 2026; Rare Element Resources 10-Q, Q2 2026; MP Materials 10-K, 2025; RTX, 20 Oct 2026; Defense News and Naval News, Sep to Oct 2026; L3Harris, Apr and Jul 2026.

Part three: energy, people, chorus

Megawatts, engineers and quotes

Sources: ACS Sustainable Chem. Eng. 12(10), Mar 2024; JOM, 2025; Metall. Mater. Trans. B 48B, 2017; NETL, 2014; Hydro, Aug 2010; UK NEPC, May 2026; National Academies testimony, Dec 2015; SME technical briefing, Feb 2014; CSIS, May 2023; Heritage Foundation TIDALWAVE ch. 6, Jan 2026; Bloomberg via MINING.COM, 15 Oct 2026.

V · The promoter’s read

“One company is ready.” Its filings disagree.

On 25 October Oilprice.com asked whether anyone was ready for the deadline and answered that, for heavy rare earths in North America, “thus far appears to be one company: REalloys.” [Source: Oilprice.com, 25 Oct 2026] The disclosure at the foot says the site’s owner “owns shares and/or stock options of the featured company”, may sell them at any time, and that this “should be viewed as a major conflict with our ability to be unbiased.” It also says no one was paid to publish. The piece is one of a run of REalloys articles on the site, including a write-up of a Buy rating from Clear Street, the placement agent for the company’s June raise. [Source: Oilprice.com, Jul to Oct 2026; REalloys 10-Q, Q2 2026]

REalloys reached Nasdaq in February through a reverse merger with Blackboxstocks. In the second quarter it reported $0.8 million of revenue and a $36.8 million net loss, most of it share-based pay, and closed June with $122.4 million in cash after a $100 million placement. [Source: REalloys 8-K and 10-Q, 13 Aug 2026]

Its own filings set the dates; only samples are due before 1 January. [Source: REalloys 10-Q, Q2 2026; releases, 11 Mar and 29 Sep 2026]

The company has real assets, including a metals business in Euclid, Ohio that sells to the Defense Logistics Agency. What it does not have is compliant heavy rare earth metal at scale on 1 January. Nor does anyone else in North America. [NPSI assessment]

VI · The chain

The grip is past the mine

The draft framed the cliff as a mining problem. The numbers put it further down the line.

China mined about 270,000 of the world’s 390,000 tonnes of rare earth oxide in 2025, or 69%. The United States mined 51,000. [Source: USGS, Feb 2026] But China separates and refines about 91% of magnet rare earths, makes about 94% of sintered magnets, and refines more than 99% of dysprosium and terbium. [Source: IEA, 23 Oct 2025; Adamas Intelligence, Dec 2025] The United States relied on imports for all of its heavy rare earths in 2021 to 2025, and USGS attributes 100% of its terbium imports in 2021 to 2024 to China. [Source: USGS, Feb 2026]

That is why the new verbs matter. “Melted or produced” caught the magnet maker. “Refined or separated” catches the chemistry in between, which is where the chain runs through China. [NPSI assessment]

VII · The tonnes

Defence is a sliver

The Pentagon has never published how many magnets it buys. The GAO puts its demand below 0.1% of world consumption. [Source: GAO-24-107176] One analyst estimates 200 to 300 tonnes of NdFeB and 200 to 400 tonnes of samarium-cobalt a year. [Source: InvestorNews, 7 Oct 2026] The stockpile plan for FY2025 listed 450 tonnes of NdFeB block as a potential purchase. [Source: USGS, Feb 2026]

American capacity already exceeds that. MP Materials began making magnets in Fort Worth in December 2025. eVAC’s plant in Sumter, South Carolina is rated near 2,000 tonnes, Noveon about 2,000, and USA Rare Earth targets a 600-tonne run rate in Oklahoma this quarter. [Source: MP Materials 10-K, 2025; eVAC; Noveon, 19 Jan 2026; USA Rare Earth, 10 Aug 2026]

The problem is who buys the rest. General Motors terminated its supply agreement with the Sumter plant on 1 July, which was to take about 90% of the output. eVAC is contesting the termination in arbitration. [Source: Reuters, 22 Oct 2026] Outside China, NdPr oxide traded at $95 a kilogram in August, under the $110 floor the Pentagon guarantees MP. [Source: Benchmark, 21 Aug 2026; MP Materials 8-K, Jul 2025]

The draft calls GM’s exit a relief valve: up to 1,800 tonnes a year freed for defence. The tonnes are real, and they exceed the whole estimated defence need. The feed is the catch. Sumter’s NdPr comes from Mountain Pass; its dysprosium and terbium must come from somewhere, and outside China that mostly means Lynas. A customer this small cannot fill the plants it depends on. [NPSI assessment]

VIII · The heavy end

The cheap part got built

A neodymium magnet loses strength as it heats. Dysprosium and terbium hold it in place, which is why they go into high-temperature grades for motors, actuators and guidance. Samarium-cobalt does the same job where heat is worse still.

China’s April 2025 controls on seven medium and heavy rare earths, samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium, were never suspended. Exports need licences; some are now general. [Source: USGS, Feb 2026; China Countermeasures, 2026] In June, Beijing put MP Materials and USA Rare Earth on its export control list. [Source: Morgan Lewis, Jul 2026; Benchmark, Jun 2026]

The prices tell the rest. In September, NdPr oxide outside China cost $106.50 a kilogram against $108.70 inside it. Dysprosium oxide outside China averaged $3,500, and by late September stood at about 16.3 times the Chinese price, up from 6.8 times at the end of June. Terbium oxide outside China averaged $6,745. [Source: Benchmark, 25 Sep 2026] The Western build went after the volume element. The scarce ones are still priced in Beijing. [NPSI assessment]

Nameplate is not output

Outside China, Lynas is the one commercial heavy rare earth separator on record. Lynas produced the first separated dysprosium outside China in Malaysia in May 2025, and terbium in June, and cites capacity of 240 tonnes of dysprosium and 50 of terbium a year, limited by feed. [Source: Lynas, Jul 2026] MP Materials is commissioning a 200-tonne circuit at Mountain Pass, with first output targeted for the end of 2026, for its own magnets. Energy Fuels plans 120 tonnes of dysprosium and 20 of terbium in Utah from late 2027, rising in a 2029 second phase. Aclara expects to finish building in Louisiana in late 2028, for an average of 200 and 35 over the project’s life. [Source: MP Materials, Nov 2025 and Sep 2026; Energy Fuels, 29 Jul 2026; Aclara, 13 Oct 2026]

Samarium is a step behind. Lynas made its first samarium oxide in March 2026; Energy Fuels plans 140 tonnes by the end of 2028. [Source: Critical Strategic Metals, 2026]

The industry has been here before. In September 2022 the Pentagon paused F-35 deliveries after finding Chinese-origin alloy in a Honeywell pump magnet, and resumed them in October under a national security waiver. [Source: Breaking Defense, Oct 2022] The widely quoted figure of 417 kilograms of rare earths per F-35 traces to an unreleased 2012 Pentagon study whose method has never been published. [Source: CRS R41744, 2013; Adamas Intelligence, 22 Apr 2026]

IX · Beyond magnets

Tungsten is the sharper edge

For tungsten, the mine-stage test arrives with nothing domestic behind it. China produced about 67,000 of the world’s 85,000 tonnes in 2025, and Beijing has licensed exports since February 2025. [Source: USGS, Feb 2026] Tungsten in a penetrator is spent when fired and is not recovered. Rotterdam APT passed $3,000 a unit in April, against a 2025 low of $331. [Source: Reuters, 23 Mar and 29 Apr 2026] In August, Commerce ordered all US tungsten scrap sold to US buyers for a year. [Source: Federal Register, 6 Aug 2026] In September the Department of War agreed to invest $450 million in Elmet through preferred equity and warrants, alongside a stockpile contract with a $2 billion ceiling and $150 million guaranteed. [Source: Elmet, 14 Sep 2026]

Tantalum’s risk is processing and conflict ore, not China’s mines. Molybdenum is the one covered metal the United States exports. Gallium and germanium have until December 2027, and S&P still sees a germanium gap of about 150 tonnes in 2028. [Source: USGS, Feb 2026; S&P Global, Aug 2026]

X · Readiness

Where the gaps are

The matrix below sets each covered material against the four stages the rule now reaches. A full mark means supply from outside the covered nations exists at a scale a defence buyer can contract for today. A half mark means it is thin, single-source or still ramping. An open bronze ring means it is effectively absent. [NPSI assessment]

Two rows carry the risk. Heavy rare earths have one commercial separator outside China and almost no metal-making. Gallium has almost no primary supply outside China at all, and its deadline falls almost a year after the others. Every half mark in the tungsten row is held up by a price that has risen ninefold. [NPSI assessment]

XI · The grid

Time to power, not power

A magnet plant is not a smelter. Process data put NdFeB manufacturing at about 8.2 kWh of electricity per kilogram. [Source: NETL, 2014] A 10,000-tonne plant would draw about 9 megawatts on average; all 48,000 tonnes of US demand, refined from oxide up, roughly 80 to 275. [NPSI assessment] Its problem is the queue it joins. ERCOT, home to MP’s Fort Worth plant and its planned Northlake campus, had 474 GW of large loads asking to connect by June, 90% of them data centres. [Source: ERCOT, 29 Jul 2026] Power transformers averaged 128 weeks to deliver in 2025, and cost 77% more than in 2019. [Source: Wood Mackenzie via POWER, 2 Jan 2026]

Reliability bites first. Outages at Lynas’s Kalgoorlie plant were expected to cost about a month of production in the December 2025 quarter. [Source: Mining Weekly, 25 Nov 2025] USA Rare Earth’s filings warn that each of its sites depends on a single utility. [Source: USA Rare Earth 8-K, 2026]

Gallium and germanium are different. They are by-products of zinc smelters and alumina refineries. Korea Zinc’s Tennessee smelter assumes 1,849 GWh a year, about 211 MW. Century’s planned Oklahoma aluminium smelter still had no power contract after a year of talks. [Source: Korea Zinc, Jan 2026; Canary Media, 30 Apr 2026]

XII · The people

Plants are being built faster than engineers

The United States granted about 285 mining and mineral engineering degrees at all levels in 2024. The Department of Energy estimates about 6,000 new mining engineers are needed over the next decade, roughly 600 a year. Fourteen accredited programmes remain, from 25 in the early 1980s. [Source: MINING.COM, 25 Sep 2026] Reuters found at least 11 Chinese universities offering rare earth degrees, enrolling more than 500 students a year, and no undergraduate rare earth degree outside China. [Source: Reuters, 1 Jun 2026] “Anywhere else I need to train them for three years,” said Constantine Karayannopoulos, a veteran rare earth executive. [Source: Reuters, 1 Jun 2026]

Know-how is now litigated. MP Materials sued USA Rare Earth in May, alleging a former employee carried magnet process secrets across. [Source: Rare Earth Exchanges, 7 Jun 2026] The trades are contested too. Builders need 349,000 more workers this year and 456,000 in 2027, and the data centres in the same queue hire the same electricians. [Source: ABC, 15 Jan 2026; Fortune, 2 Mar 2026]

A new magnet plant takes two to four years to build and two to three more to qualify for defence. [Source: US Critical Materials, 14 May 2026, quoting an executive] The rule gives contractors 66 days. [NPSI assessment]

XIII · Scenarios

Three ways January goes

None of these is a forecast. Each names the signal that would show it is under way. [NPSI assessment]

Sources: 10 U.S.C. § 4872(e); H.R. 8800; S. 4784; MOFCOM Announcements 61, 70 and 72 of 2025 via CSET and Fastmarkets; MOFCOM, 28 Sep 2026.

XIV · Watchlist

What to watch

10 Nov

Expiry date in the text of China’s suspension notice; watch for an amending announcement.

27 Nov

Whether Beijing extends its pause on the US gallium and germanium ban.

Dec

FY2027 defence bill: § 1803 of the House text and § 816 of the Senate text in conference.

1 Jan

Upstream bar and waiver cut-off. First mitigation plans accepted, and by whom.

10 Jan

End of the US-China arrangement; status of the October 2025 controls.

~16 Jan

EO 14415 guidance and remedies list; the bill-of-materials clock.

Q4 2026

MP’s first heavy rare earth output; the eVAC arbitration with General Motors.

Sources and verification

Sources and open items

1. 01Govinfo. Pub. L. 115-232 § 871; 116-92 § 849; 116-283 § 844; 118-31 § 854; 118-159 § 844; 119-60 §§ 843, 844, 848. govinfo.gov
2. 02Federal Register. DFARS Case 2021-D015 final rule, 89 FR 46816, 30 May 2024. federalregister.gov
3. 03Federal Register. Executive Order 14415, 91 FR 46693, 23 Jul 2026. federalregister.gov
4. 04eCFR. 48 CFR 225.7018 and 252.225-7052, Sep 2026. ecfr.gov · acquisition.gov
5. 05Congress. H.R. 8800 (engrossed, 22 Jul 2026); S. 4784 (reported, 15 Jun 2026); CRS IN12704. govinfo.gov · congress.gov
6. 06Pillsbury. Time running short: DFARS covered materials clauses, 21 Oct 2026. pillsburylaw.com
7. 07Wiley. DFARS overhaul class deviations, updated 24 Jul 2026. wiley.law
8. 08Orrick. Critical minerals waiver cessation takes effect 1 Jan 2027, 1 Oct 2026. orrick.com
9. 09MOFCOM. Kuala Lumpur arrangement extended to 10 Jan 2027, 28 Sep 2026; Announcements 61, 70, 72 of 2025. mofcom.gov.cn
10. 10CSET; Fastmarkets. MOFCOM Notice 61 translation; China suspends US export prohibition, 11 Nov 2025. cset.georgetown.edu · fastmarkets.com
11. 11Morgan Lewis; Benchmark. China export control actions, Jul 2026; dual-use ban on US entities, Jun 2026. morganlewis.com · benchmarkminerals.com
12. 12USGS. Mineral Commodity Summaries 2026: rare earths, heavy rare earths, tungsten, tantalum, molybdenum, gallium, germanium. pubs.usgs.gov
13. 13IEA. With new export controls, supply concentration risks become reality, 23 Oct 2025; Global Critical Minerals Outlook 2026. iea.org
14. 14Adamas Intelligence. Rare earth magnet outlook, Dec 2025; How much rare earth does an F-35 contain, 22 Apr 2026. adamasintel.com
15. 15Benchmark Mineral Intelligence. Ex-China NdPr below $110 floor, 21 Aug 2026; Q3 2026 rare earths price review, 25 Sep 2026. benchmarkminerals.com
16. 16Reuters via EnergyNow. US industry struggles to meet 2027 deadline, 27 Jul 2026. energynow.com
17. 17Reuters via KFGO. GM cancels deal with new US rare earth magnet plant, 22 Oct 2026. kfgo.com
18. 18MP Materials. 2025 Form 10-K; Q3 2025 and Q2 2026 results; DoD agreements 8-K, Jul 2025. sec.gov
19. 19Lynas Rare Earths. FY26 results and call, Jul to Aug 2026. investing.com
20. 20Energy Fuels. Heavy rare earth plant under construction, 29 Jul 2026. energyfuels.com
21. 21Aclara Resources. Basic engineering for US heavy rare earth separation, 13 Oct 2026. stockhouse.com
22. 22USA Rare Earth. Q2 2026 results, 10 Aug 2026; 8-K risk factors, 2026. sec.gov
23. 23Noveon; eVAC. Series C, 19 Jan 2026; first magnets shipped, Dec 2025. prnewswire.com · evac-magnetics.com
24. 24GAO. GAO-24-107176, rare earth elements in defence. gao.gov
25. 25InvestorNews. How many magnets does the US military need, 7 Oct 2026 (estimate). investornews.com
26. 26CRS. R41744, Rare earth elements in national defense, 17 Sep 2013. everycrsreport.com
27. 27Breaking Defense. Pentagon approves waiver to restart F-35 deliveries, Oct 2022. breakingdefense.com
28. 28Critical Strategic Metals. Samarium supply chain, 2026. criticalstrategicmetals.com
29. 29Reuters via MINING.COM. Tungsten breaks records, 29 Apr 2026; every missile burns US tungsten stocks, 23 Mar 2026. mining.com
30. 30Elmet Technologies. DLA tungsten contract and Department of War equity, 14 Sep 2026. globenewswire.com
31. 31Federal Register. BIS tungsten scrap order, 6 Aug 2026. federalregister.gov
32. 32S&P Global. Gallium and germanium market reports, Aug 2026. spglobal.com
33. 33Payne Institute. North American germanium supply chain, 29 Jul 2026. payneinstitute.mines.edu
34. 34SMM. Tantalum and key metals review, 20 Oct 2026. metal.com
35. 35NETL. Unit process: NdFeB permanent magnet manufacturing, 2014. netl.doe.gov
36. 36ERCOT. Board update Dec 2025; grid analysis Apr 2026; Senate testimony, 29 Jul 2026. ercot.com
37. 37Wood Mackenzie via POWER. Transformers in 2026, 2 Jan 2026. powermag.com
38. 38Mining Weekly; Canary Media. Lynas Kalgoorlie outages, 25 Nov 2025; Oklahoma smelter power, 30 Apr 2026. miningweekly.com · canarymedia.com
39. 39Korea Zinc. US smelter investment deck, Jan 2026. koreazinc.co.kr
40. 40MINING.COM; Reuters. Rare earth engineers, 25 Sep 2026; rare earth degrees in China, 1 Jun 2026. mining.com
41. 41ABC; Fortune. Construction workforce, 15 Jan 2026; electrician shortage, 2 Mar 2026. abc.org · fortune.com
42. 42US Critical Materials; Rare Earth Exchanges. Permitting delays, 14 May 2026; talent war, 7 Jun 2026. uscriticalmaterials.com · rareearthexchanges.com
43. 43Oilprice.com. The Pentagon’s rare earth deadline is almost here, 25 Oct 2026, with disclosure; REalloys series, Jul to Oct 2026. oilprice.com
44. 44REalloys. 8-K, 25 Feb 2026; Q2 2026 8-K and 10-Q, 13 Aug 2026; releases, 11 Mar and 29 Sep 2026. sec.gov
45. 45Lynas Rare Earths. ASX announcements on Hondo (2021), Seadrift (2023), capex and US LOI (2026). asx.com.au
46. 46Energy Fuels. Commercial separated NdPr at White Mesa, 10 Jun 2024; VAC acquisition, 23 Jun 2026. energyfuels.com
47. 47Rare Element Resources. Form 10-Q, Q2 2026; project update, 9 Jun 2026. sec.gov
48. 48Holcombe et al. ACS Sustainable Chem. Eng. 12(10), 2024; JOM, 2025. doi.org
49. 49Rhodium Group; IEA. Minerals, metals and megawatts, 24 Mar 2026; Energy and AI, Apr 2025. rhg.com · iea.org
50. 50SME; CSIS. Workforce trends technical briefing, Feb 2014; mining engineers, 8 May 2023. smenet.org · csis.org
51. 51Heritage Foundation. TIDALWAVE, chapter 6, 20 Jan 2026. heritage.org
52. 52RTX; Defense News. Q3 2026 results, 20 Oct 2026; AMRAAM award, 29 Sep 2026. rtx.com · defensenews.com

Open items, published rather than hidden: the text of Class Deviation 2026-O0041 Rev. 1; a MOFCOM instrument extending the rare earth or gallium suspensions; the Pentagon’s own magnet tonnage, which has never been released; Lynas’s heavy rare earth capacity, which is a management statement. Figures marked as estimates are estimates. “[NPSI assessment]” marks analysis, kept in its own sentence. Nothing here is legal advice. Research closed 27 October 2026.

Companion: Before the First of January

Companion brief · Contractor readiness

A working checklist for suppliers to the Department of War, drawn from NPSI Special Briefing NPSI-20261027, The 2027 Cliff. It reads public texts as of 27 October 2026. It is not legal advice, and a contracts lawyer should read your own clauses.

Who is caught

• Any item, at any tier, containing a covered material: samarium-cobalt or neodymium-iron-boron magnets, tantalum metals and alloys, tungsten metal powder or tungsten heavy alloy. Commercial items included. [Source: 10 U.S.C. § 4872; DFARS 252.225-7052]
• From 1 January, material mined, refined or separated in China, Russia, Iran or North Korea, as well as melted or produced there. [Source: Pub. L. 119-60 § 848]
• Off-the-shelf items escape only if they are less than 50% covered material by weight. Mill products not yet in an end item stay covered. [Source: 48 CFR 225.7018-3]
• Molybdenum is in the statute but not yet in the clauses. Gallium and germanium join on 18 December 2027. [Source: Pub. L. 119-60 § 844]
• Prime purchases at or below the simplified acquisition threshold, and most electronic devices, remain excepted in the DFARS. [Source: 48 CFR 225.7018-3]

Which clause is in your contract

Clause readings follow Pillsbury, 21 Oct 2026, and Wiley, 24 Jul 2026. Class Deviation 2026-O0041 Rev. 1 itself could not be retrieved.

Ten actions

What to do before 1 January

1. 01
   Pull every open contract, subcontract and purchase order. Record the clause number, award date and each delivery date. [Source: Pillsbury, 21 Oct 2026]
2. 02
   Rank by exposure. Deliveries due on or soon after 1 January under clause 7052 come first. [Source: Pillsbury, 21 Oct 2026]
3. 03
   Ask for the amendment. Where an award predates 2027, seek a written change deleting 7052 and inserting 7961. [Source: Pillsbury, 21 Oct 2026]
4. 04
   Push it down the tiers. A modification at the prime does not flow to your suppliers by itself. [Source: Pillsbury, 21 Oct 2026]
5. 05
   Build the indentured bill of materials. Trace each covered material to the mine of origin. The coming rules will require it. [Source: EO 14415 § 3(b)]
6. 06
   Flag the hard parts first. High-temperature NdFeB with dysprosium or terbium, samarium-cobalt, tungsten heavy alloy and powder, and tantalum powder processed in China. [NPSI assessment]
7. 07
   Keep the paper. Hold records of where each stage happened: mining, refining, separation, melting, production and final manufacture. [Source: Pillsbury, 21 Oct 2026]
8. 08
   Draft the mitigation plan now. Name the non-compliant source, document exhaustive efforts, set the removal steps and a timeline. Without one, no nonavailability waiver. [Source: EO 14415 § 2(b)]
9. 09
   Fund the alternative. Qualification efforts must be “active, adequately funded, and ongoing”. Failing to qualify a source is not, by itself, nonavailability. [Source: EO 14415 § 2(c)]
10. 10
    Vet your suppliers. Financial risk, foreign ownership or control, and supply concentration. Expect a 15-day risk notice and a 45-day corrective plan in the rules. [Source: EO 14415 § 3(b), (c)]

Material by material

Where the risk sits

Sources: USGS Mineral Commodity Summaries 2026; IEA, Oct 2025; Benchmark Mineral Intelligence, 25 Sep 2026; S&P Global, Aug 2026; company releases. Supplier names are illustrative, not endorsements.

The dates

10 Nov

Expiry in the text of China’s suspension notice for its October 2025 controls.

27 Nov

Expiry of China’s pause on its US gallium and germanium ban.

31 Dec

House NDAA repeal trigger, if enacted.

1 Jan

Upstream bar; waiver cut-off without a plan.

10 Jan

End of the extended US-China arrangement.

~16 Jan

EO 14415 guidance due; rules about 90 days later.

18 Dec 2027

Gallium and germanium covered.

Corrections before release

The author’s edition of 27 October was checked against its primary sources before release, and these changes were made on 28 October. The statute, the DFARS clauses, Executive Order 14415 and both NDAA bills match their texts; the China dates and the day counts hold. Section 848 adds a paragraph to § 4872, not a subsection. National security waivers can also follow a request to the national security adviser. China now issues some general export licences. General Motors terminated its eVAC agreement on 1 July, as the filings put it. REalloys’ own schedule has qualification samples due before 1 January, and nothing else. The grid estimate for magnet production is about 80 to 275 MW, not 90 to 300. Two verdicts in the line-by-line check move from Wrong to Partly, because the draft’s figures match the record and only a label or a base year was wrong. The DFARS row now says the regulation cites both laws. Lynas is named as the one commercial heavy rare earth separator on record, and the undergraduate count outside China reads “none found”. Three sentences are restated in a neutral register. In the companion, the waiver line is limited to nonavailability waivers, the action list is dated to 1 January rather than a day count, and two source references are corrected.

Engage with this Special Briefing

Substantive comment, technical critique, and named response are welcomed, from contracting officers, procurement counsel and materials processors above all. A correction will be published and credited.