The U.S. government spends roughly $900 billion on defense each year. The private aerospace and defense sector generates close to $1 trillion in annual revenue.
Over the next five years, nearly $10 trillion will flow through production lines that build fighter jets, missile defense systems, naval vessels, radar networks, satellites, and drones.
All of it depends on one industrial step North America largely abandoned decades ago: the conversion of rare-earth oxide into magnet-grade metal.
For decades, China has dominated rare earths — not just because it mined the most, but because it converted rare earth oxides into metal, the final, most critical step that makes it all usable. Anything North America mined had to be exported elsewhere for metallization. Beijing has controlled the conversion, and with it the pricing power and supply. Now, it’s Washington’s turn.
In a North American first, REalloys (NASDAQ: ALOY) is converting rare-earth oxides, including heavy rare earth oxides, into finished metals at its Euclid, Ohio facility — a development that has already received U.S. government funding and the appointment of retired General Jack Keane, former Vice Chief of Staff of the U.S. Army and a long-standing national security strategist, to its board.
With military readiness driving procurement policy, the company has locked in the upstream supply. An executed partnership with the Saskatchewan Research Council secures rights to heavy rare earths for Euclid. Additional non-Chinese feedstock agreements reinforce the chain. From separation to metal, the pathway runs inside North America — not through China.
With these deals REalloys has consolidated upstream feedstock, midstream separation, and downstream metallization under a single North American umbrella.
Tying Up Loose Rare Earths Ends
For decades, the United States has congratulated itself on building the most advanced military hardware on earth.
But the reality is that even American defense is made in China because Beijing controls the conversion process that provides magnet-grade metals for defense and aerospace production.
F-35s may be assembled in America, but the metallurgical transformation that makes them viable occurs in China, making it easy to weaponize these vital natural resources. That was the structure of the supply chain.
In 2022, the Pentagon temporarily halted deliveries of F-35 fighters following the discovery that the raw materials used for a magnet in the lubrication pump in the F-35 was produced in China. Imagine the impact to U.S. national security and the economic impact on Lockheed Martin when deliveries of over one hundred F-35s that sell for ~$100 million each were halted because of Chinese rare earths in American F-35s.
“Almost no one outside China can reliably and scalably turn rare earth oxides into finished metal,” REalloys CEO Leonard Sternheim says, and they’re doing it now in Ohio.
REalloys’ Euclid facility in Ohio brings the most critical part of the supply chain back home.
Euclid is where the chemistry turns into control.
Separated rare-earth oxides arrive as powder and leave as high-purity, defense-grade metal ready to be alloyed into magnets.
That conversion step is the dividing line between a mine and a functioning supply chain.
REAlloys runs proven calciothermic and metallothermic reduction processes at Euclid to produce both light and heavy rare-earth metals: NdPr for magnet strength and dysprosium and terbium for heat stability and high-coercivity performance.
The separated rare-earth oxides made by REalloys’ partner Saskatchewan Research Council (SRC) fuels the Euclid metallization facility. SRC processes monazite, bastnasite and recycled magnet feed into high-purity light and heavy rare-earth oxides. Those oxides move into Euclid’s reduction lines, where the conversion to metal takes place inside North America, not China.
And that’s just the beginning of solidifying a fully-owned North American rare earths pipeline.
Phase 2 expands the platform at scale. The planned REA processing facility targets approximately 3,000 tonnes per year of NdPr metal and about 245 tonnes per year of rare, heavy dysprosium and terbium metals–the magnet-critical streams that define performance in defense and advanced industrial systems.
Securing feedstock has been as deliberate as building metallization capacity.
In Greenland, REalloys (NASDAQ: ALOY) signed a long-term non-binding letter of intent for approximately 15% of production from the Tanbreez rare earth project — one of the largest heavy and medium rare earth deposits outside China. That agreement anchors future concentrate supply from a Western-controlled resource directly into its North American processing platform.
In Kazakhstan, non-binding agreements with AltynGroup provide access to rare earth-bearing material from the Kokbulak project and surrounding concessions. The structure links Central Asian resource streams to Ohio-based metallization, expanding supply options beyond the Chinese processing system.
In Brazil, they have a signed MOU for a long-term offtake agreementtied to the Araxá project in Minas Gerais adds another non-Chinese intake stream, further diversifying potential concentrate flow into the platform.
Politics & Geopolitics Catching Up to the Supply Chain
For years, rare earth vulnerability was treated as a supply-chain inconvenience. Now, it’s a national security issue, with all the leverage in Beijing. American policy is now starting to reflect this critical defense and industrial oversight.
Defense procurement rules now draw a line. Beginning in 2027, updated Federal Acquisition Regulation provisions prohibit the use of Chinese-origin rare-earth magnet materials in U.S. defense systems, requiring prime contractors to certify their supply chains are compliant.
The Defense Production Act and Title 50 authorities channel federal capital directly into domestic separation, metallization, and magnet manufacturing, and executive directives on critical minerals place rare earth processing inside the national security mandate.
Washington is not just rewriting procurement rules, it’s committing capital.
The Export-Import Bank of the United States has issued a letter of interest for up to $200 million in potential financing to support rare earth processing and supply chain buildout tied to REalloys’ platform. That is federal capital backing domestic metallization capacity.
The appointment of retired General Jack Keane to the REalloys board reflects the national security urgency of this domestic policy shift.
Keane served as Vice Chief of Staff of the U.S. Army and has been a long-standing national security strategist. His presence signals that rare earth metallization has moved beyond industrial policy discussion and into strategic defense planning.
Rare earth metals are not abstract commodities inside the Pentagon, but inputs tied directly to readiness.
When a former four-star general joins the board of a metallization company, the message is not subtle. The supply chain is now part of the rapidly accelerating security conversation.
For decades, China converted the oxide into metal and supplied the magnets that powered American defense systems. Washington financed the platforms while Beijing controlled the metallurgical gate that determined performance.
That arrangement gave China pricing power and supply leverage over the most advanced military hardware on earth.
Now, the United States is seeking to rebuild it at home.
REalloys converts oxide into metal in Ohio. Federal procurement rules prohibit Chinese-origin magnet materials beginning in 2027, and American defense capital is backing separation and metallization inside North America for the first time.
Over the next five years, nearly $10 trillion will move through the U.S. defense industrial base. It can’t run without magnet-grade metal, and for the first time in decades, that metal is now being produced back where it belongs.
By. Michael Kern
