America Produces Less Than 1% of the Rare Earth Magnets It Needs | OilPrice.com
Tom Kool
Tom majored in International Business at Amsterdam’s Higher School of Economics and later completed an Executive MBA in Energy Transition at the University of Groningen.…
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By Tom Kool – Oct 27, 2026, 7:00 PM CDT
China’s ongoing weaponization of rare earths, which has now been bolstered to include measures to keep individuals with sensitive technological knowledge from leaving the country, gives it leverage over a $1.5 trillion U.S. civilian economy that depends on permanent magnets.
The Pentagon has spent years preparing for life without Chinese rare earths, but the civilian economy hasn’t. IMF researchers identified 34 sectors of the U.S. economy with direct exposure to rare earth supply disruptions, while the International Energy Agency (IEA) estimates a complete Chinese cutoff could put roughly $6.5 trillion of downstream industrial production outside China at risk.
The Defense Department’s January 1, 2027 sourcing rules are designed to eliminate Chinese-origin rare earth magnets from Pentagon procurement, but DoW accounts for less than 0.1% of global rare earth demand, according to the U.S. Government Accountability Office.
The civilian economy is quite a different story, and its dependence is matched by an equally stark supply gap. Reuters reported that the United States consumed about 48,000 tonnes of rare earth permanent magnets in 2025 but produced only about 300 tonnes domestically.
If Beijing ever banned exports in totality, automakers, industrial equipment manufacturers, robotics companies, electronics producers, data centers and medical device manufacturers would all be competing for the same limited domestic supply.
That leaves a simple question: who is building enough capacity to help replace China?
REalloys (NASDAQ: ALOY) is attempting one of the industry’s most ambitious answers, constructing what it says will become the largest heavy rare earth metallization facility outside China and the Western Hemisphere’s first commercial-scale heavy rare earth metallization platform.
Building For A World Without China
Heavy rare earth supply chains take years to assemble, which explains the pace of REalloys’ dealmaking over the past two years.
REalloys secured long-term access to separated heavy rare earth feedstock through an exclusive commercial agreement with the Saskatchewan Research Council (SRC), followed by a 15-year definitive offtake agreement covering 15% of Phase 1 production from Critical Metals’ Tanbreez Project in Greenland, one of the world’s largest rare earth deposits outside China. Additional agreements in Brazil, Montana, Wyoming and Kazakhstan expanded that supply network across multiple allied jurisdictions.
In March, the Defense Logistics Agency awarded REalloys a contract worth up to $1.7 million to develop modular heavy rare earth metallization technology. Days later, the company announced plans for what it says will become the largest heavy rare earth metallization facility outside China, designed to produce approximately 30 tonnes of dysprosium metal and 15 tonnes of terbium metal annually.
The buildout continued with a letter of intent for a strategic partnership with JS Link to integrate alloy production and permanent magnet manufacturing into a single North American platform. In June, REalloys completed an approximately $100 million institutional private placement to accelerate commercial construction and entered exclusive negotiations with the U.S. Army to build and operate commercial heavy rare earth processing facilities at Tooele Army Depot in Utah.
The final product? The first commercial critical minerals processing operation on a U.S. military installation, supplying both government and commercial customers.
The Window Is Narrowing
The supply outlook is worsening, with the IEA projecting demand for magnet rare earths outside China will increase by roughly 50% by 2035. Even if every announced project comes online, non-Chinese supply chains would satisfy only about 50% of expected mining demand, roughly 25% of refining demand and less than 20% of permanent magnet demand. Metallization and magnet manufacturing remain the largest bottlenecks.
Expanding supply
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