Part II
The most critical materials include rare earths, titanium, tungsten, antimony, gallium, germanium, aluminum, beryllium, and special polymers such as HTPB. China controls 70-90% of global production and refining. Chinese export restrictions (2023-2025), including bans for military use, have already driven up prices and left U.S. stocks of some key minerals lasting only 2 months in high-demand scenarios.
Conflicts in the Middle East are making things even worse by disrupting the flow of sulfur, which is essential for sulfuric acid, explosives, semiconductors, and nitrogen.
This is not a new situation. In World War I, the British artillery boom ended in the 1915 Shell Crisis: guns limited to just 4 shots per day due to lack of propellants and explosives. In World War II, the U.S. went from 2,000 planes per year to nearly 300,000 (1941-1945), but faced severe shortages of aluminum, copper, and nickel. The pattern is repeating today: demand explodes, but industrial capacity does not keep up.
And the situation only tends to get worse. Since June 2025, the U.S. government has started accepting deliveries of F-35 fighters without operational radars due to critical delays in the AN/APG-85, a powerful symbol that even priority assets in the American arsenal are being affected.
New Chinese restrictions, disruptions in the Strait of Hormuz, or an escalation in the Middle East could worsen these bottlenecks overnight. This would lead to missed earnings, contractual fines, shrinking backlogs, and high stock volatility. Margins will be eroded, and orders may be reviewed or canceled.
The supply of raw materials simply cannot keep pace with weapon demand; mines are not producing at the required scale, and China is unlikely to cooperate. Furthermore, there is fierce competition for these same resources driven by the technological revolution in manufacturing and logistics.
There is currently a massive push to replenish stocks and expand production capacity; recent conflicts have proven that existing munitions are only sufficient for brief periods of high-intensity warfare. Additionally, the surge in global tensions is fueling a worldwide demand for armaments as nations grow increasingly concerned about the threat of new conflicts at their borders.
Yes, arms companies are doing well right now, but the boom is fragile. Before putting money behind the geopolitical opportunity, deeply understand the supply chains. Those who ignore this turn an opportunity into a trap. The risk for tomorrow is real and it lies in supply, not just in demand.