China's Rare Earth Grip on the U.S. Military Is About to Break

OilPrice.com Market Commentary

NEW YORK, March 2, 2026 /CNW/ -- In a typical Chinese rare earth processing plant, 200 workers move through a maze of massive chemical tanks, risking life and limb to produce the materials that power everything from fighter jets and missile components to cellphones.  Hundreds of these facilities operate across China, and they give Beijing overwhelming control over the single most critical choke point in the modern industrial economy.  Companies mentioned in this release include: REalloys Inc. (ALOY), Lockheed Martin Corporation (NYSE: LMT), RTX Corporation (NYSE: RTX), The Boeing Company (NYSE: BA), Northrop Grumman Corporation (NYSE: NOC), General Dynamics Corporation (NYSE: GD).

But now, in Saskatchewan, Canada, a hi-tech plant of engineers and chemists is beginning to break that monopoly.

The facility is built around an AI enabled operating system that minimizes waste, reduces exposure to hazardous materials, and creates a cleaner, more secure processing chain.

And one company has locked in exclusive rights to the vast majority of what that plant produces.  That company is REalloys (ALOY).

It operates in the part of the rare earth supply chain that barely exists outside China - the step where strategic independence is actually won or lost.

As President Trump pointed out, it isn't rare earths that are critical to national security, it's the "rare processing" industry.

Digging minerals out of the ground is relatively easy. Turning them into finished metals and alloys for fighter jets, drones, missile guidance systems, and advanced radar is something else entirely. 

That's where Western supply chains break down, and where REalloys is fighting to make a difference.

The company operates its own metallization facility in Euclid, Ohio, built on nearly a decade of R&D with the U.S. Department of Energy and Department of Defense. It also holds an exclusive offtake agreement with the Saskatchewan Research Council (SRC), the government-backed group behind the AI-powered processing plant.

Here's how the chain works: SRC refines rare earth feedstock sourced from allied nations across four continents. REalloys takes delivery in Ohio, converts those metals into defense-grade alloys and magnets, and has confirmed contracts with the U.S. defense industrial base.

Every critical step happens on North American soil - with no Chinese chemicals, no Chinese technology, and no Chinese capital.

As REalloys' Head of R&D, Andy Sherman, puts it: "Concentrates are commodities. Materials are commitments."

The Pentagon doesn't buy rocks. It buys finished, defense-qualified materials.

And that's exactly what this supply chain delivers.

How China Accidentally Created Its Biggest Competition

When REalloys (ALOY) processing partner began developing its first commercial rare earth separation facility, China controlled the overwhelming majority of global export technology. Following China's 2020 export control law, access to that technology became restricted.

So the team ultimately designed and built its own separation, control and automation systems domestically – establishing independent Western rare earth processing capability.

What they ended up with was an alternative to Chinese technology with better output and without the supply chain risk. 

As a result, the facility has automated the most labor-intensive step of rare earth processing, separating up to 17 chemically similar elements into the specific rare earths you need.

In a Chinese plant, this process requires over 200 workers managing chemical tanks and adjusting valves manually. The Saskatchewan facility was able to reduce this by approximately 80 workers and an AI that receives thousands of data points every second and can make the necessary adjustments  that no human team could coordinate.

The plant was deliberately built at about 25-30% the capacity of a full-scale Chinese commercial facility, essentially a demonstration plant to prove the technology. At a fraction of the size, however, it already has the capability to produce much higher purity metals and higher output than Chinese plants.

Commercial production is expected to start in early 2027, once the plant reaches full production REalloys (ALOY) expects to receive approximately 460 tonnes of defense-grade rare earth metals per year. That material becomes the permanent magnets inside the next generation of Western defense systems like fighter jets, missiles, and drones.

Why This Matters Right Now

Most people have heard that China dominates the rare earths market, about 90% of the world's rare earths are processed there. What they haven't thought through is what that actually means when the supply gets cut off.

Japan figured this out decades ago and built strategic stockpiles covering two to three years of national consumption. The United States, however, has stockpiled nothing. Neither has Europe.

We've been running on just-in-time supply from a country that issues rare earth export licenses on a monthly basis. If Beijing is happy with you this month, you get your allocation. If they're not, they cut it.

When China briefly restricted exports last year, a Ford plant was forced to shut down almost immediately. When Trump threatened 100% tariffs, China's response was simple: no more processed rare earths. Trump backed off very quickly.

Now consider the effects on the military side. In 2024, Ukraine produced 1.2 million combat drones, every single magnet in every one of them was manufactured in China. An F-35 carries 435 kilos of rare earths. A next-gen U.S. destroyer needs 4.5 tons. A nuclear submarine needs 1.5 tons.

Without a secure supply of these materials, none of those systems get built, which means China effectively holds a kill switch over Western defense production.

The Pentagon knows it, too. That's why new procurement rules taking effect January 1, 2027, will ban Chinese-sourced rare earths from the entire U.S. defense supply chain, from the mine all the way through to the finished product. 

That means every defense contractor in the country will need a qualified, non-Chinese source. REalloys is positioning to be that source.

"1% Reliance on China Is 100% Reliance on China"

There's a reality in the rare earth industry that most companies haven't seemed to fully consider: 1% reliance on China is 100% reliance on China. If any single input in your supply chain comes from Beijing, your entire operation is one phone call away from shutting down. 

REalloys' (ALOY) supply chain has no Chinese inputs at any stage, processing technology, furnaces, chemicals, AI systems, or consumables. All of it is sourced outside China.

Most of the competition can't say the same. You can mine rare earths in the U.S., build your own processing plant, and still be one supply disruption away from a shutdown. 

That's because critical parts like graphite anodes need replacing several times a week, and right now they only come from China. Starting from zero, it would realistically take five to seven years to build what REalloys already has.

What Makes This Opportunity Different

REalloys has exclusive rights to defense-grade rare earth metals through the Saskatchewan facility, including the heavy rare earths, Dysprosium and Terbium, that dramatically increase a magnet's performance. 

Light rare earths go into washing machines and consumer EVs. Heavy rare earths, on the other hand, go into F-35 fighter jet engines and missile guidance systems. REalloys plays the scarcer, more strategically critical end of the market, at a fraction of the valuation.

Their Ohio facility converts those metals into finished alloys and magnets, and scaled production is expected to scale up to 18,000 tonnes per year of heavy rare earth permanent magnets. At that level, REalloys expects to become the largest producer of refined Dysprosium and Terbium outside of China.

Washington has taken notice as well. REalloys has secured a $200 million letter of intent from the U.S. EXIM Bank. And the board reads less like a commodities company and more like a national security briefing, including a former Vice Chief of Staff of the U.S. Army, the President of GM Defense, an executive formerly from top defense companies like Raytheon and Boeing, the former Premier of Saskatchewan, and the President of Palantir Canada.

The Pentagon's deadline is now months away, while competitors are still 5 to 7 years behind. 

REalloys (ALOY) expects to be the only company with a fully operational, non-Chinese, mine-to-magnet supply chain when it arrives, powered by six people and an AI that outperforms plants with 80 workers on the floor.

Despite what most believe, the rare earth story was never about who has the raw material in the ground. It's about who can turn the raw material into something the Pentagon can actually use, and right now, that answer seems to be REalloys.

Here are other companies in the defense sector that people should be watching closely over the coming months:

Lockheed Martin Corporation (NYSE: LMT) remains the backbone of the U.S. defense industrial base, anchored by its leadership in advanced combat aircraft, missile systems, and integrated air and missile defense. The company's F-35 Lightning II program continues to serve as the single largest weapons system program in the world, supplying not only the U.S. military but also a growing list of allied nations.

Beyond fighter jets, Lockheed is deeply embedded in missile defense architecture through systems such as THAAD and PAC-3 interceptors, both of which have seen rising demand amid renewed Middle East and Indo-Pacific tensions.

RTX Corporation (NYSE: RTX), formed from the merger of Raytheon and United Technologies, has evolved into one of the most diversified defense and aerospace platforms globally. Its portfolio spans missile defense systems, advanced radars, aircraft engines, avionics, and cybersecurity solutions, giving it exposure across air, land, sea, and space domains.

Raytheon's Patriot missile system remains one of the most widely deployed air defense platforms worldwide and has seen renewed demand amid heightened missile threats. RTX has also benefited from increased orders for interceptors and replenishment contracts, particularly as governments seek to strengthen layered defense systems.

The company has recently focused on stabilizing margins following supply chain disruptions and cost overruns that impacted certain aerospace programs. With backlog levels remaining robust, RTX's revenue visibility remains strong, supported by long-term government contracts and allied defense procurement.

While The Boeing Company (NYSE: BA) is widely known for commercial aviation, its defense, space, and security division remains a cornerstone of U.S. military procurement. The company manufactures the P-8 Poseidon maritime patrol aircraft, the KC-46 aerial refueling tanker, Apache helicopters, and various satellite and space systems critical to U.S. defense infrastructure.

As geopolitical tensions elevate demand for surveillance, refueling capacity, and integrated aerospace systems, Boeing's defense division provides an important stabilizing component to the broader company profile. While commercial aviation cycles remain volatile, Boeing's defense segment ensures long-duration contract visibility and sustained Pentagon exposure.

Northrop Grumman Corporation (NYSE: NOC) occupies a critical role in high-end aerospace and strategic systems. The company is the prime contractor for the B-21 Raider stealth bomber, one of the most strategically significant modernization programs in the U.S. Air Force's history. That program alone provides decades of potential production and sustainment revenue.

Northrop also leads in unmanned aerial systems, missile defense integration, and space-based sensor technologies. Its exposure to next-generation aerospace and advanced stealth platforms places it at the center of U.S. long-term deterrence strategy.

General Dynamics Corporation (NYSE: GD) combines shipbuilding, combat vehicles, aerospace, and IT systems under one diversified umbrella. The company's Electric Boat division produces Virginia-class submarines and Columbia-class ballistic missile submarines -- programs that anchor U.S. naval deterrence.

Recent submarine contracts extend production visibility well into the next decade, while geopolitical tensions continue to emphasize naval force projection and undersea capability. GD's land systems division.

By. Tom Kool

IMPORTANT NOTICE AND DISCLAIMER 

FORWARD LOOKING STATEMENTS
This publication contains forward-looking statements, including statements regarding expected continual growth of the featured companies and/or industry. The Publisher notes that statements contained herein that look forward in time, which include everything other than historical information, involve risks and uncertainties that may affect the companies' actual results of operations. Factors that could cause actual results to differ include, but are not limited to, changing governmental laws and policies concerning, among other things, recreational and medical cannabis sales, success of the company's proprietary technology, the size and growth of the market for the company's products and services, the company's ability to fund its capital requirements in the near term and long term, pricing pressures, etc. 

SHARE OWNERSHIP
Neither the author nor the publisher, Oilprice.com, was paid to publish this communication concerning REalloys (ALOY). However, the owner of Oilprice.com owns shares and/or stock options of the featured company and therefore has an incentive to see the featured company's stock perform well. The owner of Oilprice.com may buy or sell shares of the featured company at any time including at or near the time you receive this communication. This share ownership should be viewed as a major conflict with our ability to be unbiased. This is why we stress that you conduct extensive due diligence as well as seek the advice of your financial advisor or a registered broker-dealer before investing in any securities.

This communication is not, and should not be construed to be, an offer to sell or a solicitation of an offer to buy any security. Neither this communication nor the Publisher purport to provide a complete analysis of any company or its financial position. The Publisher is not, and does not purport to be, a broker-dealer or registered investment adviser. This communication is not, and should not be construed to be, personalized investment advice directed to or appropriate for any particular investor. Any investment should be made only after consulting a professional investment advisor and only after reviewing the financial statements and other pertinent corporate information about the company. Further, readers are advised to read and carefully consider the Risk Factors identified and discussed in the advertised company's SEC, SEDAR and/or other government filings. Investing in securities is speculative and carries a high degree of risk. Past performance does not guarantee future results. This communication is based on information generally available to the public and does not contain any material, non-public information. The information on which it is based is believed to be reliable. Nevertheless, the Publisher cannot guarantee the accuracy or completeness of the information.

INDEMNIFICATION/RELEASE OF LIABILITY
By reading this communication, you acknowledge that you have read and understand this disclaimer, and further that to the greatest extent permitted under law, you release the Publisher, its affiliates, assigns and successors from any and all liability, damages, and injury from this communication. You further warrant that you are solely responsible for any financial outcome that may come from your investment decisions.

TERMS OF USE
By reading this communication you agree that you have reviewed and fully agree to the Terms of Use found here http://oilprice.com/terms-and-conditions If you do not agree to the Terms of Use http://oilprice.com/terms-and-conditions, please contact Oilprice.com to discontinue receiving future communications.

INTELLECTUAL PROPERTY
Oilprice.com is the Publisher's trademark. All other trademarks used in this communication are the property of their respective trademark holders.  The Publisher is not affiliated, connected, or associated with, and is not sponsored, approved, or originated by, the trademark holders unless otherwise stated. No claim is made by the Publisher to any rights in any third-party trademarks.

Contact:
OilPrice.com
[phone]
[email protected]

SOURCE OilPrice.com