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NEW YORK , March 10, 2026 /PRNewswire/ -- The Pentagon has taken a step toward rebuilding one of the most fragile links in the U.S. defense supply chain: the industrial capability to turn rare earth minerals into the metals that power most modern weapons systems. Companies mentioned in this release include: REalloys Inc. (ALOY), Lockheed Martin (NYSE: LMT), RTX Corporation (NYSE: RTX), Boeing (NYSE: BA), Northrop Grumman (NYSE: NOC), General Dynamics (NYSE: GD).

REAlloys (ALOY) announced this week that the Defense Logistics Agency (DLA) has awarded a contract to Terves LLC–now part of the REalloys platform–to advance next-generation metallothermal production of samarium and gadolinium, two rare earth metals embedded in some of the military's most demanding systems.

The contract does more than fund laboratory research. Its core deliverable is the engineering design of a modular production facility capable of producing roughly 300 tons per year of these metals, a capacity designed to be deployed and replicated quickly as demand grows.

The deal forms part of a broader shift now underway in Washington's rare earth strategy, as new defense procurement rules banning Chinese-origin rare earth materials take effect next year.

For more than a decade, policymakers treated rare earth dependence primarily as a mining problem. The new DLA contract targets a different layer of the supply chain: the industrial step where rare earth oxides are converted into metal and alloy forms that manufacturers can actually use. This step–known as metallization–is where the West's supply chain largely disappeared over the past several decades. And it is also where China retains overwhelming control.

THE PROCESSING GAP

Rare earth elements are not actually rare. Deposits exist across North America, Europe, and Australia. The problem lies further downstream.

"Rare earth elements are relatively widespread geologically; what is scarce is the industrial capability to economically separate them into high-purity oxides and then convert them into metals and alloys at scale," REalloys co-founder Tim Johnston explained in an interview with Oilprice.

That missing capability is now widely recognized as the real strategic vulnerability in the supply chain. China controls the vast majority of global rare earth processing and metallization capacity. While mining operations exist around the world, the conversion of those materials into finished metals and magnets has remained heavily concentrated inside China's industrial ecosystem. That concentration creates a structural chokepoint for Western manufacturers.

"If China said we're not going to give you rare earths," said Saskatchewan Research Council CEO Mike Crabtree in a separate interview, "that means no F-35s, no missiles."

For defense planners, the issue is not simply access to raw material. It is the ability to produce consistent, high-purity metal that meets strict industrial specifications.

"Defense customers need consistency," said metallurgist Andy Sherman, head of research and development at REAlloys. "You have to produce metals to the exact specifications real customers require." In industrial terms, that consistency determines whether supply chains function at all.

MISSILE SYSTEMS, JET ENGINES, AND EXTREME HEAT

The metals targeted by the new DLA contract illustrate the stakes. Samarium is a key ingredient in samarium-cobalt permanent magnets, which are used in systems that must operate at extremely high temperatures. Unlike conventional rare earth magnets, samarium-cobalt magnets maintain performance under the heat and stress conditions found in jet engines, missile systems, and aerospace applications.

Gadolinium plays a different but equally strategic role. The metal is used in specialized radar systems, advanced optics, and nuclear technologies where its neutron-absorbing properties are critical.

Both materials are considered essential inputs for defense and high-performance industrial systems. Yet the United States has long relied on overseas supply for the separated metal forms of these elements. The DLA contract could change that.

By funding the scale-up of metallothermal processing for samarium and gadolinium, the Pentagon is effectively backing the reconstruction of a domestic production capability that disappeared from North America decades ago.

A MODULAR APPROACH

One of the most notable aspects of the REAlloys project is its modular design. Traditional rare earth processing plants are large, capital-intensive facilities built around solvent extraction systems that require enormous infrastructure investments. REalloys (ALOY) says its platform takes a different approach.

Instead of relying on massive centralized plants, the company is developing a modular architecture capable of directly converting Samarium-Europium-Gadolinium feedstocks into high-purity metals.

The company says the design allows reactors to be deployed and replicated more quickly than conventional facilities while reducing both capital intensity and operating costs. The approach also aligns with the Pentagon's critical supply chain strategy: building distributed capacity rather than relying on a handful of large processing centers.

A BROADER SUPPLY CHAIN BUILDOUT

The contract forms part of a broader effort to rebuild rare earth processing capacity inside North America after decades of industrial drift toward China. REAlloys has been positioning itself within that effort as a vertically integrated platform linking multiple stages of the value chain.

Upstream resources include the company's Hoidas Lake rare earth project in Saskatchewan, along with non-binding feedstock agreements and partnerships with suppliers in North and South America. Midstream processing is being developed in partnership with the Saskatchewan Research Council, which is building one of North America's first vertically integrated rare earth processing facilities. SRC expects that facility to begin full operations later this decade. Downstream metallization and alloy production are centered at REAlloys' operations in Euclid, Ohio, where the company says it has already delivered specialty metals and alloys under U.S. government contracts. That facility is expected to play a central role as the broader supply chain comes online.

THE 2027 SUPPLY CHAIN DEADLINE

The urgency behind these projects is not purely economic. Beginning in 2027, U.S. defense procurement rules will significantly tighten restrictions on the use of materials sourced from certain foreign supply chains, particularly those linked to China. Those rules are expected to ripple across the defense industrial base.

"Policy timing adds pressure," Johnston said. "Moving from a project to commercial heavy rare earth metallization can take multiple years."

That timeline means companies that already possess operational expertise may hold a significant advantage. "Metallization is one of the least developed parts of the value chain outside China," Johnston noted. "Even with strong execution and capital, you're looking at a multi-year timeline to build that capability."

In other words, the race is no longer about who can identify rare earth deposits. It's about who can rebuild the industrial machinery required to turn those materials into functioning components of the modern economy. And that machinery is only now beginning to return to North American soil.

Other companies to keep an eye on in the defense supply chain space:

Lockheed Martin (NYSE: LMT) stands as perhaps the single largest end-user of rare earth materials in the U.S. defense industrial base. Every F-35 Lightning II rolling off the production line depends on samarium-cobalt magnets, rare earth alloys, and specialized components that trace back to the very supply chain the Pentagon is now racing to rebuild. With thousands of aircraft on order across allied nations, Lockheed's exposure to rare earth sourcing risk is enormous — and growing.

Beyond the F-35, Lockheed's THAAD and PAC-3 missile interceptor programs rely on guidance systems and propulsion components built with rare earth inputs. Rising demand for missile replenishment across the Middle East and Indo-Pacific has only amplified the volume of critical materials flowing through its production lines. Any disruption at the metallization stage would ripple directly into delivery timelines. As the 2027 procurement restrictions approach, Lockheed's ability to maintain production rates will depend heavily on whether domestic rare earth processing capacity can scale fast enough.

RTX Corporation (NYSE: RTX) operates at the intersection of missile defense and advanced sensor systems — two domains where rare earth dependency runs deep. Its Patriot missile platform, one of the most widely fielded air defense systems on the planet, relies on rare earth permanent magnets and precision electronics that currently trace back through processing chains dominated by China.

The company's radar and electronic warfare portfolio adds another layer of exposure. Advanced phased-array radars and multi-domain sensor systems require high-purity rare earth inputs for performance at the tolerances military customers demand. As allied governments rush to strengthen layered missile defense, RTX's order book is swelling — and so is its appetite for secure material supply.

RTX's Collins Aerospace division further extends that dependency across both military and commercial aviation platforms. With aftermarket demand surging and new interceptor contracts stacking up, RTX's business trajectory is increasingly linked to whether the West can stand up reliable rare earth metallization capacity outside of Chinese control.

Boeing (NYSE: BA) may be best known for commercial aircraft, but its defense division consumes rare earth materials across a surprisingly broad portfolio. From the P-8 Poseidon's surveillance electronics to the Apache helicopter's targeting systems, rare earth magnets and specialty alloys are embedded throughout Boeing's military platforms.

The KC-46 tanker program and Boeing's satellite production lines add further demand for materials that currently flow through vulnerable supply chains. As the Pentagon pushes to restock and modernize simultaneously, Boeing's defense backlog depends on consistent access to the processed metals and magnet alloys that make these systems function.

With maritime surveillance and aerial refueling capacity becoming higher priorities amid Indo-Pacific tensions, Boeing's defense segment faces a paradox: growing demand paired with an unresolved dependency on foreign-processed rare earth materials.

Northrop Grumman (NYSE: NOC) sits at the highest-classification tier of rare earth dependency in American defense. The B-21 Raider stealth bomber — the most strategically significant aircraft program in a generation — demands rare earth materials for its propulsion, avionics, and low-observable technologies, all manufactured to specifications that allow zero room for inconsistency.

Northrop's leadership in space-based sensor networks and missile tracking systems adds another critical layer. Satellite constellations and advanced ISR platforms depend on rare earth components engineered for extreme operating environments, from deep space thermal cycling to high-radiation exposure.

As the Pentagon doubles down on strategic deterrence and space modernization, Northrop's programs sit squarely in the path of the 2027 procurement restrictions. The company's production timelines for classified and unclassified programs alike will be shaped by whether secure, non-Chinese sources of high-purity rare earth metals materialize on schedule.

General Dynamics (NYSE: GD) anchors U.S.naval deterrence through programs that consume rare earth materials in ways rarely discussed publicly. The Virginia-class and Columbia-class submarine programs depend on rare earth permanent magnets for propulsion systems, sonar arrays, and navigation electronics — components where material purity is not optional but existential.

The company's combat vehicle division extends that exposure on land. Abrams tank modernization and next-generation armored vehicle programs incorporate rare earth alloys in targeting systems, communications equipment, and electronic countermeasures. Each replenishment and upgrade cycle pulls additional processed rare earth material through a supply chain that remains dangerously concentrated.

With submarine production visibility stretching well into the next decade and land vehicle modernization accelerating, General Dynamics faces sustained long-term demand for the very metals the Pentagon is now funding companies to produce domestically.

By. Josh Owens

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