China’s virtual monopoly on rare earth elements used in high-technology applications has been loosened, reducing the risk that supplies to U.S. defense contractors could be disrupted, according to the Pentagon’s latest assessment of the nation’s industrial base.“Global market forces are leading to positive changes in rare earth supply chains, and a sufficient supply of most of these materials likely will be available to the defense industrial base,” according to the Pentagon report by Elana Broitman, the Defense Department’s top official on the U.S. industrial base. “Prices for most rare earth oxides and metals have declined approximately 60 percent from their peaks in the summer of 2011.”

Rare earths are 17 chemically similar elements used in products from Apple Inc.’s (AAPL) iPads and hybrid-electric cars to smart bombs and Tomahawk cruise missiles made by Raytheon Co. (RTN)

“An increase in supply of material from outside of China” and the substitution of other substances have reduced reliance on China since 2011, when it controlled 95 percent of the world’s supply and imposed export restrictions, said the report, which was sent to Congress last week.

Congress in 2011 required the Pentagon to examine the use of rare earth materials in defense applications, determine if non-U.S. supplies might be disrupted, and suggest ways to ensure long-term availability, as well as secure an assured source of supply by 2015.

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