Pentagon Eyes Unprecedented 75-Year Deal to End China’s Rare Earth Stranglehold | 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 – Nov 03, 2026, 7:22 PM CST
The U.S. Army wants first dibs on American-produced heavy rare earths, and REalloys (NASDAQ: ALOY) has just signed a landmark nonbinding term sheet that could put it at the top of the military’s supply chain list.
And the terms are extraordinary. The term sheet proposes a potential 75-year operating lease on approximately 200 acres at Tooele Army Depot in Utah, where REalloys would build and operate a facility processing dysprosium and terbium, two metals China has spent decades monopolizing.
In return, one of the things that the Army wants is the right of first offer on production, giving it an opportunity to secure the materials for American weapons manufacturers before they are offered to other buyers, although it is not obligated to purchase any.
This is the latest development in a relationship that began taking shape in June, when the Army selected REalloys for exclusive negotiations.
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Now, the two sides have signed a term sheet spelling out the proposed commercial terms: an initial 50-year lease, a possible 25-year extension, government ownership of the land and a privately financed industrial operation that could help supply the military for generations. The term sheet is non-binding, and the final lease still requires financing and regulatory approvals.
Consider what the Army is proposing here.
Rather than waiting for a domestic rare earth industry to develop on its own, it is making military land available to a private producer and negotiating priority access to the output. The company would carry the cost of construction and operations, while the Army would gain a source of American-processed heavy rare earths, particularly dysprosium and terbium, which at or near the top of Washington’s metals wishlist.
Dysprosium and terbium are used in the high-performance magnets that keep working when temperatures climb inside fighter aircraft, missile systems, and advanced electric motors. Radar, sonar and precision-guided munitions also depend on specialized magnetic materials. The problem is that China controls almost all global processing of dysprosium and terbium, leaving American defense manufacturers exposed to Chinese export licensing decisions.
That dependence became painfully obvious when Beijing introduced export restrictions on seven categories of medium and heavy rare earths in April 2025. Manufacturers suddenly faced delays, licensing requirements, and uncertainty over materials that had previously moved through established supply chains.
For the Pentagon, the stakes are unusually high.
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Retired four-star General Jack Keane, who serves on REalloys’ board, put the military consequences plainly in the company’s announcement:. “For too long, the United States has depended on adversaries and others for the materials inside its most advanced defense technology and China has made clear it is prepared to use that dependence as leverage. Dysprosium and terbium sit at the center of that vulnerability. Our ability to deter conflict, and to prevail if deterrence fails, depends on producing munitions and weapons systems at scale, and that requires supply chains we control. This term sheet is an important step toward bringing heavy rare earth processing onto a U.S. defense installation. “
The Army’s own Dr. Jeff Waksman was equally direct, describing rare earth processing as a national security vulnerability and pointing to China’s near-total control of dysprosium and terbium.
The Pentagon has also imposed a deadline. Beginning January 1, 2027, expanded federal sourcing restrictions will apply to covered rare earth magnets and their supply chains. Defense contractors will need compliant sources of materials, processing, and manufacturing.
That creates an opening for companies capable of producing qualified rare earth metals outside China.
REalloys Has Been Assembling the Pieces
REalloys (NASDAQ: ALOY) has spent the past two years doing precisely that, securing feedstock, processing capacity, metallization technology, and financing across North America.
The company is already developing rare earth materials in Euclid, Ohio, and has partnered with Canada’s Saskatchewan Research Council to expand non-Chinese rare earth processing.
Under that arrangement, REalloys secured rights to approximately 80% of SRC’s expanded output, with the upgraded facility targeting annual production capacity of roughly 525 tonnes of NdPr metal, 30 tonnes of dysprosium oxide and 15 tonnes of terbium oxide
Those numbers are important because the rare earth business has a serious problem between the mine and the finished magnet.
Mining rare earths is one thing. Separating them, converting the oxides into metals and producing the alloys used in advanced magnets requires specialized equipment and technical expertise. China dominates those industrial processes, which is why simply opening new Western mines won’t eliminate dependence on Chinese suppliers.
REalloys is developing what it says will become the largest heavy rare earth metallization facility outside China, with commissioning currently targeted for the first quarter of 2028.
The company has also secured a 15-year offtake agreement covering 15% of Phase 1 production from Critical Metals’ Tanbreez project in Greenland, adding another potential source of rare earth feedstock outside China.
Other non-binding agreements involving Montana, Wyoming, and international partners expand the company’s access to raw materials, while its strategic LOI with JS Link aims to connect rare earth alloy production with perman
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