The agency overseeing the Pentagon’s supply chain is making a significant move to purchase a large stockpile of cobalt for the first time in decades, as global tensions create supply chain vulnerabilities. This decision aligns with the U.S.’s efforts to enhance domestic production of rare earth materials and reduce dependence on foreign adversaries like China and Russia.
According to the System for Award Management (SAM) website, the Defense Logistics Agency (DLA) has issued a solicitation to procure cobalt cut cathode/rounds worth up to $500 million to stockpile approximately 7,500 tons of this crucial industrial metal. Cobalt is utilized in various defense applications, from jet engine turbines to armor-piercing munitions and high-strength magnets used in rockets.
The solicitation posted on SAM’s website specifies that this acquisition is not reserved for small businesses, with a contract value ranging from $2 million to $500 million for cobalt cut cathode/rounds. The Government emphasizes the need for the cobalt to be suitable for long-term storage in an enclosed warehouse.
A source familiar with DLA’s procurement stated that this is the first time the agency has sought to purchase cobalt since 1990, reflecting a shift in strategy amidst growing geopolitical risks and supply chain vulnerabilities. With the world facing heightened uncertainty, Washington is prioritizing the revitalization of domestic supply chains, particularly in critical sectors like semiconductors and rare earth materials, in preparation for the anticipated geopolitical challenges of the 2030s.
Currently, China holds a dominant position in the global rare earths industry, including cobalt processing, and has established substantial strategic reserves. In contrast, the U.S. is actively engaging with allies and domestic companies to strengthen rare earth production and reduce reliance on China. The recent agreement between the Pentagon and MP Materials exemplifies this effort to diversify supply chains and enhance national security.
As the world navigates through a period of increasing geopolitical complexity, strategic decisions like stockpiling cobalt underscore the importance of safeguarding key supply chains and promoting domestic production capabilities.