The Alarming Supply Crisis Facing the U.S. Military and Its Impact

The U.S. military is currently grappling with a profound supply crisis that has raised significant concerns regarding its operational readiness. The Pentagon has reported a drastic depletion of its stockpiles of vital armaments, which are dwindling at an unprecedented rate. This critical challenge has unfolded amidst an ongoing global conflict in Ukraine, where allied nations find themselves inadequately armed. Alarmingly, some intelligence sources in Germany reveal that the country holds only two days' worth of ammunition in case of military hostilities.

In response to the escalating shortages, the European Union allocated a staggering €500 million as part of the Act in Support of Ammunition Production (ASAP), with the objective of elevating output capacity to a remarkable 2 million shells annually by the end of 2025. However, Western militaries face an alarming predicament: they lack a crucial mineral known as Antimony, which is indispensable for the production of new military hardware. Compounding these woes, the summer of 2024 witnessed China implementing export restrictions on Antimony, causing prices to skyrocket by an astonishing 200% in mere months.

Despite this precarious scenario, several companies from Australia and Canada are racing to introduce new streams of antimony supply to the market. Notably, a Canadian exploration firm called Military Metals has recognized the troubling trend early on and has proactively acquired antimony assets in North America and Europe. Their goal is to enable the Western world to maintain its defense capabilities without relying on Chinese sources for this critical metal.

New Antimony Supply Sources: A Strategic Move

Critical minerals played a pivotal role in securing victory for the Allies during World War II, primarily because they controlled a significant portion of the world's resources at the time, according to the Carnegie Endowment for International Peace. However, the current landscape has shifted dramatically, with China exercising substantial control over essential minerals, including antimony, which is fundamental for national defense purposes.

Military Metals is taking a proactive stance by acquiring antimony assets in Nevada and Nova Scotia—one of North America's few known sources of this essential resource. Furthermore, the company has recently announced its acquisition of one of Europe’s largest antimony deposits located in Slovakia. This Soviet-era resource, initially discovered in the 1950s and previously developed in the 1980s and 1990s, boasts a remarkable historical resource of over 60,998 tons of antimony. The site holds an in-situ value estimated at $2 billion, based on current market rates, and positions Slovakia as a potential critical metals hub for Western defense industries.

Comparing Military Metals to its closest competitor, Perpetua Resources, shows a stark contrast in valuations. While Perpetua holds a slightly larger antimony resource of 90,000 tons and has seen its market valuation surge to approximately $700 million, Military Metals is currently valued at only $25 million despite possessing a historical resource worth billions.

Across Canada, Military Metals has secured a historical antimony/gold project that was crucial during WWI, underlining its significance in defense supply sustainability. Their strategic acquisition on October 24, 2024, of additional claims surrounding West Gore—a site known for its historical significance—could enhance its foothold within the North American defense framework, especially as prices continue to climb.

A Call to Action: The Importance of Antimony

With China tightening its grip on critical metal exports, Military Metals has expanded its focus on antimony, rapidly acquiring mines across two continents. According to CEO Scott Eldridge, the impending supply crunch in antimony could undermine defense capabilities, especially as prices have surged from $12,000 per ton to $38,000 this year due to new restrictions.

The urgency of these supply challenges is further underscored by a significant initiative from the U.S. Army, which is making strides to enhance ammunition production. The Army has set forth plans to increase production of 155-millimeter artillery shells—a critical component of modern warfare—from approximately 40,000 shells per month to a staggering 100,000. This ramp-up necessitates a reliable antimony supply at a time when China continues to exert control over this vital resource.

As Military Metals, SQM, Centrus Energy Corp., Barrick Gold Corporation, Newmont Corporation, and Arch Resources, Inc. work to navigate this turbulent landscape, the focus remains on mitigating vulnerabilities in critical supply chains. Ensuring a steady supply of essential materials like antimony is paramount for the resilience of U.S. defense capabilities in an increasingly complex global environment.

The developments in this sector signal looming opportunities and strategic transitions as the U.S. and allied partners confront the realities of reduced reliance on potentially adversarial sources and gear up to secure their defense industries.

By: Michael Scott