China’s Control Over Rare Earths and the West’s Strategic Missteps

REalloys: Reshaping North America's Rare Earth Supply Chain

REalloys (NASDAQ: ALOY) stands among a select group of North American companies that are succeeding where much of the Western world has struggled for decades: breaking China’s stranglehold on the U.S. defense supply chain for critical materials.

Historically, the U.S. defense industry has depended on overseas processing for vital materials. REalloys has emerged as the only North American producer of the specialized alloys required for high-performance magnets in advanced defense applications.

Challenging China’s Downstream Dominance

China’s control over the rare earth market is rooted not in mining, but in its mastery of downstream processing. As the U.S. government commits $8.5 billion to rebuild the supply chain, a key realization has emerged: it’s not raw materials, but refined metals that power factories.

“China’s advantage isn’t just in extraction—it’s in building a complete system: separation, refining, metals, magnets, all interconnected,” explains REalloys CEO Lipi Sternheim. “While our competitors are years away from production, we’re already operational.”

By the time rare earths were recognized as strategically vital, the infrastructure needed to process them was already centralized in China. Beijing then leveraged this position, imposing export controls to dictate which defense and manufacturing programs could access supplies.

Sternheim notes, “REAlloys was created specifically to restore end-to-end rare earth capabilities outside of China.”

Accelerating Domestic Processing

Momentum is building as the U.S. Department of Defense prioritizes domestic processing of critical metals. REalloys has tackled the rare earth bottleneck that has hampered Western manufacturing by restoring North American conversion capacity. Through a partnership with the Saskatchewan Research Council (SRC), REalloys transforms separated rare earth material into metals and alloys within North America, making it the only regional company with a domestic supply from a heavy rare earth refinery.

With this infrastructure in place, REalloys has secured long-term feedstock agreements, including a significant supply arrangement with Kazakhstan.

A long-term non-binding offtake agreement with AltynGroup enables REalloys to source rare earth feedstock from Kazakhstan and directly integrate it into its North American metallization and alloying operations. The material remains within the supply chain, never leaving as mere concentrate.

Simply put, it’s metals and alloys—not oxides or concentrates—that drive technology and defense systems.

Closing the Conversion Gap

Until rare earths are transformed into metals and alloys, they cannot be used in motors, magnets, or weapons. This conversion step has been the weak link in Western supply chains for decades.

By processing materials all the way to finished metals and alloys within the U.S., REalloys addresses the critical gap that cannot be remedied in a crisis or substituted at the last minute.

The feedstock is sourced from AltynGroup’s Kokbulak project in Kazakhstan, where rare earths are recovered as a byproduct of iron ore mining. The concentrate contains both light and heavy rare earth elements, including dysprosium and terbium.

Previously, North America often sent foreign rare earth material back overseas before it reached metal or alloy form. REalloys’ approach ensures that material remains within the domestic supply chain until it becomes defense-grade output.

This isn’t a future plan—the Kazakhstan feedstock is already flowing into an operational system.

North America’s Only Full-Scale Rare Earth Conversion Facility

REalloys operates the sole facility in North America capable of converting rare earths—including heavy elements—into metals and alloys at scale.

This capability is based at their Euclid, Ohio location, where rare earth metals and alloys are already being produced for U.S. government clients.

This stage is where rare earths become usable for defense, motors, and high-performance magnets—a step the West has largely lost control over. With new U.S. regulations coming in 2027 to limit Chinese rare earths in defense and federally supported manufacturing, domestic conversion capacity is becoming increasingly vital.

No other facility in North America matches REalloys’ capabilities for heavy rare earth processing. Building such infrastructure is a long-term endeavor, requiring years for permitting, financing, construction, and defense qualification. Even with accelerated efforts, meaningful competition is still years away.

REalloys (NASDAQ: ALOY) has consolidated these capabilities into a unified operating system.

Kazakhstan supplies scalable feedstock, Hoidas Lake in Saskatchewan offers another upstream source, the partnership with the Saskatchewan Research Council anchors midstream processing, and the Euclid facility completes the loop by producing defense-grade metals and alloys. This is a fully integrated system designed to keep material under Western control from start to finish.

National Security Takes Center Stage

The U.S. government is now openly addressing concerns that defense experts have raised privately for years.

Recently, Washington hosted discussions with allied nations to reduce China’s influence over critical mineral supply chains. The issue has shifted from industrial competition to a matter of national security, with little margin for error remaining.

China has already exercised its leverage, cutting off rare earth supplies to specific military and industrial customers.

In late 2025, Beijing enacted a targeted ban on the export of certain rare earth materials and processing technologies for military purposes, blocking shipments essential for guidance systems, magnets, and advanced electronics used by foreign militaries.

Japan has also faced similar restrictions.

Amid renewed tensions with Tokyo, China has tightened export controls and licensing for rare earths, echoing its 2010 move that disrupted Japan’s automotive and electronics industries and forced emergency stockpiling.

Government Action and Strategic Stockpiles

The Pentagon has moved from concern to direct intervention.

Alongside the Department of Defense’s focus on downstream processing, the U.S. government is establishing a $12 billion strategic stockpile of critical minerals, including rare earths, lithium, nickel, and cobalt. This initiative aims to reduce dependence on China and ensure supply for defense, manufacturing, and technology sectors.

Leveraging Defense Production Act authorities and direct investment, the government has funneled capital into domestic rare earth processing and magnet production, supporting companies like MP Materials (NASDAQ: MP) to safeguard U.S. weapons programs from reliance on Chinese metals.

While government initiatives are still progressing through policy channels, REalloys is already delivering rare earth metals and alloys within the U.S.—the very segment now deemed critical by the Department of Defense.

REalloys occupies the pivotal downstream position in the supply chain. The most challenging part of the process is already operational, demand is strong, and barriers to entry remain high.

Other Noteworthy Rare Earth Companies

Stay informed about additional companies active in the rare earth sector.

By Josh Owens

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