Investors Are Racing to Find America's Next Rare Earth Winner

The Pentagon’s investment in MP Materials marked the biggest U.S. intervention in the rare earth industry in decades. The deal established a domestic champion for one of the world’s most strategically important supply chains and demonstrated that Washington is prepared to commit federal financial resources to critical mineral production.

Mountain Pass is the only large-scale rare earth mine operating in the United States and one of the world’s largest producers of light rare earths. Its ore is rich in neodymium and praseodymium (NdPr), the two elements that form the foundation of high-performance permanent magnets used in electric vehicles, industrial motors and defense systems.

But the real challenge begins with heavy rare earths.

Dysprosium and terbium are two of the most strategically important heavy rare earth elements. They are added to permanent magnets that must operate under extreme temperatures, including those used in fighter aircraft, guided missiles, submarines and many advanced electric motors.

Mountain Pass is primarily a light rare earth deposit. While MP Materials has developed an SEG+ concentrate containing medium and heavy rare earths, additional sources of dysprosium- and terbium-bearing feedstock remain necessary to support large-scale domestic production of high-temperature permanent magnets.

That has forced the industry to look elsewhere for heavy rare earth feedstock, along with the separation, metallization, alloy production and magnet manufacturing capacity needed to turn those materials into finished products.

The next fortunes in rare earths are unlikely to come from another Mountain Pass. They’ll come from the companies supplying what Mountain Pass cannot.

That has opened an entirely new battleground across the rare earth industry.

Who Will Build the Rest of America’s Rare Earth Supply Chain?

REalloys (NASDAQ:ALOY) is building the supply chain piece by piece.

Over the past year, REalloys has assembled a series of agreements spanning nearly every major stage of the industry, from heavy rare earth feedstock and separation to metallization and permanent magnet manufacturing.

Feedstock comes first.

REalloys owns 100% of Hoidas Lake heavy rare earth mine in Saskatchewan.

And a 15-year supply arrangement for rare earth concentrate from the Tanbreez Project, one of the world’s largest rare earth deposits outside China.

Additional agreements in Kazakhstan, Brazil and USA further diversified the company’s future supply base, reducing reliance on any single jurisdiction or project.

Also, earlier this year, the company secured long-term supply agreements with the Canadian government-run Saskatchewan Research Council (SRC) covering separated heavy rare earth oxides, including dysprosium and terbium.

But rare earth oxides are not the final product. They must still move through metallization, alloy production and magnet manufacturing before they become usable products for the American defense and civilian economies.

REalloys has that covered, as well.

Earlier this week, the company signed a strategic agreement with permanent magnet manufacturer JS Link to develop one of the first fully integrated non-Chinese rare earth magnet platforms, bringing together feedstock, processing, metallization and permanent magnet manufacturing under a single North American industrial strategy.

Washington has noticed, starting with the Defense Logistics Agency (DLA), which manages the National Defense Stockpile and serves as the combat logistics agency for the Department of Defense, NASA and numerous other federal agencies.

Washington has noticed.

In March, the Defense Logistics Agency awarded REalloys a contract worth up to $1.7 million to design a modular processing facility capable of producing 300 metric tons per year of samarium and gadolinium metals, making it one of the largest domestic sources.

Samarium and gadolinium are used in high-temperature samarium-cobalt magnets for fighter aircraft, precision-guided weapons, radar systems and other defense technologies. Reuters described the award as an “initial vote of confidence” in REalloys’ technology from the agency responsible for procuring strategic materials for the U.S. military.

The contract also addressed one of the least appreciated weaknesses in the American rare earth industry: metallization, or alloying. Mining and separating rare earth oxides are only the beginning. Those oxides must still be converted into metals before they can be manufactured into permanent magnets, and China has monopolized that part of the global supply chain.

More specifically, the DLA award supports development of REalloys’ proprietary metallization technology, one of the least developed segments of the U.S. rare earth supply chain.

The Pentagon’s message became even more explicit two months later.

In May, REalloys (NASDAQ:ALOY) disclosed that it had received a Department of Defense memorandum identifying domestic heavy rare earth production as an urgent national priority ahead of the January 1, 2027 deadline banning Chinese-origin rare earth magnets from defense procurement. The memorandum called for rapid expansion of domestic heavy rare earth processing, metallization and magnet manufacturing–the same industrial capabilities REalloys had already begun assembling through its partnerships and acquisitions.

Just weeks later, in early July, the U.S. Army selected REalloys for exclusive negotiations to develop heavy rare earth processing facilities at the Tooele Army Depot in Utah…

Under the proposed agreement, REalloys would finance, construct and operate a commercial heavy rare earth processing complex at the Tooele Army Depot under an Enhanced Use Lease structure. Rather than owning the facilities itself, the Army would make land available while REalloys develops and operates the processing platform.

The complex is designed to receive heavy rare earth materials from allied and domestic suppliers and convert them into high-purity products for government and commercial customers. Initial commercial development is targeted for 2027, with operating capability expected no later than 2028.

The project would make Tooele Army Depot the first U.S. military installation to host commercial heavy rare earth processing. The facilities are intended to produce materials for multiple federal agencies, including the U.S. Army, the Defense Logistics Agency, the Department of Energy and NASA.

REalloys calls it North America’s “missing midstream”, and it’s where domination means much more than owning the biggest mine. It’s about owning the facilities that transform rare earth concentrates into high-purity metals, specialized alloys and, ultimately, permanent magnets. That’s where China built its global advantage. It’s also where North America’s largely disappeared.

REalloys is trying to bring it back. It’s building the largest heavy rare earth metallization facility outside China, creating a new source of dysprosium and terbium metals for Western manufacturers. The end goal is to connect that metallization capacity to a fully integrated mine-to-magnet supply chain, with permanent magnet manufacturing targeted at up to 10,000 tonnes annually.

The potential customer base for a more resilient North American rare earth supply chain extends well beyond the defense sector. Tesla (NASDAQ: TSLA) relies on high-performance permanent magnets in many of its electric vehicle motors, while GE Aerospace (NYSE: GE) depends on rare earth materials for advanced jet engines and aerospace technologies where reliability under extreme conditions is essential. As the U.S. looks to reduce dependence on Chinese processing, manufacturers across multiple industries are paying closer attention to where these critical materials originate.

The technology sector has a growing stake in the issue as well. Microsoft (NASDAQ: MSFT) is investing heavily in AI infrastructure that requires large amounts of electrical equipment, power systems and advanced electronics containing critical minerals. Apple (NASDAQ: AAPL) has expanded recycling initiatives and diversified portions of its supply chain, but rare earth elements remain essential components across products ranging from iPhones and Macs to wearables. As domestic processing capacity expands, a broader range of U.S. industrial and technology companies could benefit from a more secure supply of these strategically important materials.

The high-level national security urgency and the fast cycle of deal-making and government contracts are now creating steady momentum, with investors already funding the buildout. Just days before the U.S. Army announcement, REalloys secured approximately $100 million from institutional investors to accelerate construction, giving the company fresh capital to expand one of the most ambitious rare earth manufacturing platforms in North America.

By. Tom Kool