The United States has launched hundreds of missiles and precision-guided weapons in its escalating conflict with Iran, a campaign that has consumed billions of dollars in advanced military hardware in just a few weeks. But new warnings circulating in Chinese and Western media suggest that the materials needed to continue producing these weapons may already be woefully inadequate.
Report from South China Morning Post Reuters said that if supply disruptions intensify, Washington may only have weeks or months of stockpiles of some rare earths available for defense manufacturing.
Rare earth elements are embedded throughout modern military systems – from missile guidance and drone propulsion to radar systems and fighter aircraft electronics.
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“You can’t fight twenty-first-century wars with twenty-first-century supply chains,” said REalloys CEO Lipi Sternheim. “Modern weapons rely on materials that are difficult to source, difficult to process, and difficult to replace once inventories start to get tight.”
REalloys (NASDAQ: ALOY) is one of a handful of North American companies rebuilding the rare earth metals supply chain stage, converting rare earth oxides into metals and alloys used by magnet manufacturers and defense suppliers.
It’s now the 11th hour for U.S. defense and the defense industry as a whole, even if it’s not in the middle of a war with Iran that has reportedly cost $5.6 billion in just the first two days.
This vulnerability is not new. For decades, the United States allowed much of its rare earth processing and metallization capabilities to move overseas, giving China dominance in the stage of the supply chain that turns raw materials into the metals and magnets used in advanced technologies. Today, most rare earth materials used in Western defense systems still come from Chinese processing facilities. The Pentagon is now working to reverse that reliance before a 2027 deadline that would ban U.S. weapons systems from using magnets made from Chinese-made rare earths.
REalloys’ flagship facility in Euclid, Ohio is already ahead of schedule.
Rebuilding U.S. Rare Earth Metals Capacity
Pass Mountain, California, produces rare earth concentrates that are domestically separated into praseodymium oxides. This is an important step in rebuilding North American capabilities, but oxide itself is not a material actually used by defense contractors.
Before entering manufacturing, the oxides must first be chemically reduced to pure rare earth metals. The metal is then mixed into a precision alloy that is used to produce high-performance permanent magnets.
For decades, the transition from oxides to metals occurred almost exclusively in China. Even though rare earth ores are mined in the United States and separated into oxides domestically, the metallurgical steps to convert the chemicals into usable industrial metals still occur overseas.
This is a supply chain break.
REalloys is positioned to help solve this problem.
Rare earth alloy system
At its Euclid site, the company converts rare earth oxides into finished metals and magnet-grade alloys through high-temperature reduction and refining processes. These materials are required by magnet manufacturers and advanced industrial users.
This is also one of the most technically difficult stages in the entire rare earth value chain. Metalization requires tightly controlled reduction reactions, high-temperature furnaces, and continuous process control to maintain stable yields and purity levels of a wide range of rare earth elements.
“Metalization is the least developed part of the value chain outside of China,” said Tim Johnston, co-founder of REAlloys. “It requires deep operational expertise and process control systems capable of managing the complex variables in continuous production. Even with capital and strong execution, replicating this capability typically takes three to seven years or more and involves significant technical and qualification risks.”
The Euclid plant is already operational, converting rare earth oxides into metals and alloys within North America rather than shipping the materials overseas for processing.
Upstream, REalloys owns the Hoidas Lake rare earths project in Saskatchewan, anchoring primary resource exposure within Canada.
In Greenland, the company signed a long-term, non-binding letter of intent covering approximately 15% of future production from the Tanbreez rare earths project, one of the largest heavy and medium rare earths deposits outside China.
Other supply agreements extend to Kazakhstan, where the company is working with AltynGroup to acquire materials for the Kokbulak project and surrounding concessions. In Brazil, an alliance linked to the Arxa rare earths project adds another potential source of non-Chinese feedstock.
“We’ve solved the hard part – proving that rare earth metallization and alloying can be done domestically to the specifications that customers really require,” Johnston said.
REalloys (NASDAQ: ALOY ) doesn’t stop at metals, either.
The company is also developing a large-scale permanent magnet manufacturing plant in the United States, with an initial designed annual output of approximately 3,000 tons of neodymium iron boron (NdFeB) magnets and expansion to 18,000 tons per year.
At full production, this production level could provide magnets for approximately 1.5 to 2 million electric vehicles, thousands of wind turbines, and a large number of industrial motors, robotic systems, and medical equipment each year. Defense systems from missile guidance units to radars and avionics also rely heavily on high-performance rare earth magnets.
This dependence extends throughout the contractor community. Lockheed Martin’s (NYSE: LMT) F-35 program requires hundreds of pounds of rare earth materials per airframe for flight controls, radar and electronic warfare suites, and the company has moved to dual-source critical mineral inputs as the 2027 deadline approaches. RTX Corporation (NYSE: RTX ), through its Raytheon unit, faces the same pressure, with its AMRAAM and Tomahawk production relying on dysprosium and terbium magnets that maintain performance under the heat and vibration of combat. In the smaller contractor space, Kratos Defense & Security Solutions (NASDAQ: KTOS ) has built its high-volume drone and unmanned systems business around domestic supplier agreements that lock in proven rare earth alloys — a model that only works if the metallization layers it relies on actually exist within the United States.
The plant is designed to integrate multiple stages of the rare earth value chain, including metallization, alloying, powder production and final magnet manufacturing.
If completed at the expected scale, it will become one of the largest NdFeB magnet production bases outside Asia and an important step towards rebuilding a fully integrated rare earths supply chain in North America.
With Euclid converting oxides into metals within the United States, the rare earth supply chain is beginning to close a loop that has been broken for decades — just as Washington prepares to ban rare earths from China from entering U.S. defense systems in 2027.
go through. Michael Cohen
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