The U.S. Army has signed a non-binding term sheet with REalloys (NASDAQ: ALOY) to build the first-ever commercial rare earth processing operation on a U.S. military installation. The plan covers 200 acres at Tooele Army Depot in Utah, a lease that could run as long as 75 years, and provides first access for the Army to the rare earth products produced at this facility.
Those metals are dysprosium and terbium. Every F-35, Tomahawk missile, and Virginia-class submarine depends on magnets made with them, and China produces nearly every ounce of both. In April 2025, Beijing showed it was willing to cut them off. On January 1, 2027, the Pentagon’s procurement rules start pushing Chinese material out of the defense magnet supply chain, and contractors now have just weeks to find another source before the deadline.
REalloys is already building one. Through its partnership with the Saskatchewan Research Council, it is building one of the largest rare earth processing facilities outside China, with first metal scheduled for early 2027.
In this exclusive interview with Oilprice.com, REalloys CEO Lipi Sternheim explains:
What the Army term sheet means for REalloys, and why the Army wants first access to the metal
Why only a handful of North American companies can make defense-grade heavy rare earth metals
Who can deliver when the Pentagon’s January 2027 deadline hits
How REalloys plans to produce dysprosium and terbium on a U.S. military base
The three milestones that will define the next 12 months
And much more…
What does the executed term sheet with the U.S. Army actually mean for REalloys?
For us, this is about much more than finding a place to build a plant. The U.S. Army selected us for exclusive negotiations to develop heavy rare earth processing at Tooele Army Depot in Utah. Beyond the unprecedented nature of this, what it means is that we have now agreed on the terms for a potential long-term lease covering for those 200 acres, with an initial 50-year term, and a possible 25-year extension.
Offtake’ is the word everyone wants to hear, and that’s a part of the deal we are particularly excited about. The Army wants the right of first offer on material produced at the site. That doesn't mean the Army has committed to buy anything today but it creates a direct path for the Army to access future production. And we're talking about dysprosium and terbium, materials that are essential to high-performance magnets in critical defense systems. Putting that capability on an Army installation is about as direct as the defense industry can get. It’s a key step toward securing the supply chain the country really needs, urgently.
The Army has asked for first access to the metal from Tooele. Does that mean the Army will buy from REalloys?
It means the Army is first in line to buy it before anyone else can buy it. The Army still has its own purchasing process, which we would need to go through and there are no guarantees.
Look at what the Army is doing, though. It’s giving us land on one of its own bases for decades, and it wants first call on the output. And starting in January, defense contractors have to get Chinese material out of their magnets. When that happens, the Army wants to know exactly where its dysprosium and terbium is coming from. At Tooele, the answer is inside its own perimeter.
Is REalloys effectively the only game in town for heavy rare earths?
I don't think that's the right way to look at it. North America needs more than one successful supplier, and there are other companies doing important work.
The real question is who can move beyond pilot results and actually deliver the metals that customers need, in reliable volumes and with a traceable supply chain. That's where we're focused. We have secured feedstock relationships, and are continuing to build more, fully funded near-term processing projects, metallization expertise in Ohio and now a pathway to build at an Army depot. It's that combination that makes our position compelling.
With the January 1, 2027 sourcing deadline approaching, who can actually deliver heavy rare earths? Is REalloys already producing?
The January 1 deadline is putting real urgency behind this. Defense contractors need to know not only where a magnet comes from, but where the materials inside it were processed. You can't build that kind of supply chain overnight, but we are well on our way!
We already have metallization and specialty-materials activities in Ohio. And what we’re working towards right now is producing dysprosium and terbium metals at commercial scale in Utah.
Our nearer-term production plan is centered on our fully funded expansion with the Saskatchewan Research Council. That expansion targets annual capacity of about 525 tonnes of NdPr metal, 30 tonnes of dysprosium oxide and 15 tonnes of terbium oxide, and we've secured rights to about 80% of the expanded facility's output. We've publicly targeted commissioning approximately 150 tonnes a year of NdPr metallization capacity in Q1 2027, followed by fully integrated processing and metal production in Q3 2027.
Those are the milestones we're successfully working towards, and the Utah facility is about building on that foundation at much greater scale.
What are the next steps following the preliminary term sheet, and when can investors expect a definitive agreement?
The next major step is a definitive long-term Enhanced Use Lease with the Army. There is still work to do toward finalizing lease terms and the site plan, environmental and permitting reviews, security and ownership requirements, and the necessary approvals. That's normal for a project of this size, and we're working through it with the Army.
We want to move this forward as quickly and responsibly as possible, and we'll update investors when we have a definitive milestone to announce.
Is REalloys pursuing grants, loans or other federal financial support?
Yes. We're looking at a range of options because building a domestic rare earth supply chain at this scale calls for a mix of capital. That could include private investment, project debt, strategic partners and federal programs where there's a good fit.
We already have experience working with the government, including a Defense Logistics Agency contract supporting domestic samarium and gadolinium metal production. For Tooele, REalloys would be responsible for building the facility. Our focus is on putting together a capital structure that makes the project executable.
What annual revenue opportunity could the Utah facility represent once fully operational?
We see Tooele as a potentially very meaningful business for REalloys, not just a strategic project.
Dysprosium and terbium are the starting point, but the long-term opportunity includes processing rare earths into metals and alloys, and moving further downstream into magnets.
Those products are needed in defense systems, aerospace, industrial equipment, vehicles and robotics. I don't want to throw out a revenue figure before we've finalized the plant configuration, production volumes and customer mix. What I can say is that we're designing this as a scalable manufacturing platform, and we'll share more specific economics as the project takes shape, but it’s extremely exciting for the business.
What makes REalloys different from other U.S. rare earth companies?
A lot of the rare earth conversation starts with what is in the ground. That's important, but it's only part of the problem. A mine or a separated oxide doesn't automatically give a defense contractor the metal or magnet it needs. We're focused on closing that gap, and are at the forefront of this industry
We have metallization and technical expertise in Ohio, a funded processing expansion with Canada’s SRC, and work underway on technologies such as HF-free fluoride production and more efficient metallization. We're also building toward a full mine-to-magnet supply chain, rather than stopping at one intermediate product.
And now we have the Army's selection for exclusive negotiations at Tooele. To me, what makes us different is that we're bringing the technology, feedstock, operating know-how and manufacturing footprint together. The measure of success will be qualified material delivered to customers, and not simply capacity announced on paper.
Are you in discussions with additional defense contractors or government agencies regarding long-term supply agreements?
Building those customer relationships is a major priority for us. Defense buyers demand qualification, traceability and performance requirements.
We're focused on understanding what customers need, getting materials qualified and building a path to long-term supply commitments. The Army's proposed right of first offer is one important part of that picture, but we also intend to serve other government and commercial customers.
What annual volume of heavy rare earth materials could the Utah facility eventually process?
We're designing Tooele to grow in stages, with dysprosium and terbium among the initial priorities. The long-term ambition is a much larger processing and metallization platform than our first production initiatives in Saskatchewan and Ohio, which is roughly 600 tons/year of rare earth materials.
We haven't published a final annual dysprosium and terbium capacity number for Tooele because the detailed design, feedstock plan and financing are still being worked through. But we believe that at full scale, this could become the largest heavy rare earth metallization facility in the Western World.
What are the three most important milestones investors should watch over the next 6-12 months?
First, the Army agreement. Moving from the term sheet to a definitive lease, and advancing the site plan and approvals, would be a major step for Tooele.
And now we have the Army's selection for exclusive negotiations at Tooele. To me, what makes us different is that we're bringing the technology, feedstock, operating know-how and manufacturing footprint together. The measure of success will be qualified material delivered to customers, and not simply capacity announced on paper.
Are you in discussions with additional defense contractors or government agencies regarding long-term supply agreements?
Building those customer relationships is a major priority for us. Defense buyers demand qualification, traceability and performance requirements.
We're focused on understanding what customers need, getting materials qualified and building a path to long-term supply commitments. The Army's proposed right of first offer is one important part of that picture, but we also intend to serve other government and commercial customers.
What annual volume of heavy rare earth materials could the Utah facility eventually process?
We're designing Tooele to grow in stages, with dysprosium and terbium among the initial priorities. The long-term ambition is a much larger processing and metallization platform than our first production initiatives in Saskatchewan and Ohio, which is roughly 600 tons/year of rare earth materials.
We haven't published a final annual dysprosium and terbium capacity number for Tooele because the detailed design, feedstock plan and financing are still being worked through. But we believe that at full scale, this could become the largest heavy rare earth metallization facility in the Western World.
What are the three most important milestones investors should watch over the next 6-12 months?
First, the Army agreement. Moving from the term sheet to a definitive lease, and advancing the site plan and approvals, would be a major step for Tooele.
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