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There is a mineral problem at the heart of U.S. defense manufacturing, and it comes down to two elements most people have never heard of: dysprosium and terbium. These heavy rare earth elements (REE) are not exotic curiosities. They are the core ingredients in the high-temperature permanent magnets that go into precision-guided munitions, electric motors for military aircraft, sonar systems, and radar networks. Without them, some of the most advanced weapons the U.S. military relies on simply do not work. The problem is that the United States has almost no domestic capacity to process them. According to the International Energy Agency (IEA), China controls roughly 91% of global rare earth separation and refining output, giving it an effective chokehold over materials that sit inside American weapons systems.
That is the context for understanding what REalloys Inc. (NASDAQ: ALOY) announced. The company was selected by the United States Army to enter into exclusive negotiations for a long-term Enhanced Use Lease at Tooele Army Depot in Tooele, Utah. Under the agreement, REalloys would design, finance, build, and operate heavy rare earth processing facilities directly on Army land, targeting the start of development as early as 2027 and Initial Operating Capability no later than 2028.
To understand why this matters, it helps to know what an Enhanced Use Lease actually is. Under 10 U.S.C. § 2667, the Army has the authority to lease underutilized land on its installations to private-sector partners without selling it. The government retains title to the property at all times. The private company covers all costs to finance, design, build, operate, and eventually decommission the facility. In return, the Army receives rent at or above fair market value, typically in the form of in-kind improvements that benefit the installation itself. No taxpayer money funds the construction. REalloys must also post a mandatory decommissioning bond upfront, ensuring the land can be returned to its original condition when the lease ends.
The Army described this as the first time it has placed commercial mineral-processing facilities on an American military installation, enacted directly through Executive Order 14241. The timing is not coincidental. Beginning January 1, 2027, new U.S. federal procurement rules will ban Chinese rare earth content from the defense industrial manufacturing base. The Army needs an alternative supply of dysprosium and terbium before that deadline, and it needs it operating on soil it controls.
REalloys is built around what it calls a mine-to-magnet strategy. The company’s upstream foundation includes its Hoidas Lake rare earth asset in Saskatchewan and a network of allied feedstock and recycling partners. Together with SRC, it is funding and contracting the scale-up of North American heavy rare earth midstream separation, refining, and metallization. Its downstream manufacturing operations are in Euclid, Ohio, where the facility already serves federal logistics and procurement agencies supporting the Department of Defense, the Department of Energy, and NASA. The Tooele agreement would extend that supply chain onto secure Army land, with feedstock drawn entirely from allied nations and no adversary involvement in the supply chain.
In addition to the Army deal announcement, REalloys also announced it had entered into a securities purchase agreement with institutional investors for gross proceeds of approximately $100 million through a private placement of common stock, expected to close shortly. The company’s stock has gained 87% this year so this kind of funding is less dilutive to existing shareholders.
The broader picture here is one the U.S. government has been trying to solve for years. Heavy rare earths are not interchangeable with other materials, and there is currently no meaningful non-Chinese alternative for dysprosium and terbium at scale. The Center for Strategic and International Studies has noted that China held 99% of heavy rare earth processing globally, and the closure of a Vietnamese refinery in 2024 left China as the only viable source for several of the most defense-critical elements. REalloys, if it executes on the Tooele lease, would represent the first domestic processing capacity for these materials on a U.S. military installation. For a company of its size, this is not a typical contract. It is a mandate.
