A hard deadline is reshaping American defense procurement: starting January 2027, the Pentagon will prohibit rare earth materials sourced from China in any U.S. military system.
That ban puts two obscure metals, dysprosium and terbium, at the center of a national security scramble, given China’s near-total grip on global processing of both.
REalloys (NASDAQ: ALOY) has emerged as the Army’s chosen partner to break that dependency, selected for exclusive contract negotiations over a long-term Enhanced Use Lease at Tooele Army Depot in Utah.
The proposed deal, structured around a non-binding term sheet, would grant REalloys up to approximately 200 acres of military land under an initial 50-year lease with a single 25-year renewal option.
That structure would give the company a potential 75-year operational home on federal soil, an arrangement with almost no precedent in the American mining or critical minerals industry.
Under the arrangement, the Army contributes the land while REalloys takes on the financial burden of designing, funding, and constructing the processing facility.
The company moved quickly to demonstrate it had the capital to deliver, closing a $100 million financing round on June 26, one day after the Army announced its conditional award on June 25.
REalloys finished the second quarter of 2026 holding $122.4 million in cash, with that capital earmarked to advance work across its Ohio and Saskatchewan operations as well as the prospective Utah facility.
Dysprosium and terbium are not interchangeable with other materials; they allow powerful magnets to retain their strength under extreme heat, making them indispensable in precision guidance systems, radar, sonar, and defense electronics.
At full production, the upgraded facility operated by SRC is projected to yield as much as 30 tonnes of dysprosium oxide and 15 tonnes of terbium oxide annually.
The processing chain REalloys has designed moves the material through multiple stages, with the Tooele plant converting oxides into metals before the Ohio facility transforms them into finished alloys.
The company expects SRC to be capable of shipping high-purity dysprosium and terbium oxides for customer testing before the end of this year, a timeline that puts initial output ahead of the Pentagon’s 2027 cutoff.
To reduce its dependence on any single feedstock source, REalloys has also locked in a 15-year offtake agreement covering 15% of Phase 1 production from Critical Metals’ Tanbreez project in Greenland, adding a non-Chinese supply line for raw material.
The Greenland agreement illustrates a broader strategy of building redundancy into a supply chain that currently runs almost entirely through Chinese processing facilities.
For the Army, the stakes are straightforward: the magnets embedded in its most advanced weapons platforms cannot be sourced from an adversary nation once the 2027 deadline takes effect, and domestic alternatives have until now been virtually nonexistent.
