REalloys secures 80% offtake for rare earths ahead of 2027 deadline

REalloys will receive high-purity dysprosium and terbium oxides for qualification as early as the fourth quarter of 2026, the company said June 10, as the US defense industry races to secure non-Chinese rare earth supply chains before a January 2027 compliance deadline.

"With the DFARS Jan. 1, 2027, deadline now less than seven months away, we want to begin qualifying North American dysprosium, terbium and other rare earth materials for defense and industrial permanent magnets," Lipi Sternheim, CEO of REalloys, said.

The materials will come from the Saskatchewan Research Council, which is building North America's first fully integrated commercial rare earth processing facility. REalloys has secured exclusive offtake for 80% of SRC's commercial output, covering Dy, Tb and neodymium-praseodymium oxides. SRC's initial commercial production remains on track for early 2027.

Under DFARS 252.225-7052, the Defense Department from Jan. 1, 2027, will be prohibited from procuring covered systems containing permanent magnets if the magnets or their constituent rare earth materials originate from China. The rule is expected to create demand for qualified Western sources of Dy, Tb and NdPr oxides, metals, alloys and finished magnets — a market currently dominated by Chinese producers that control more than 80% of global rare earth processing.

REalloys is also developing a wholly owned heavy rare earth metallization facility in Euclid, Ohio, with support from SRC. The facility is expected to be one of the only commercial-scale North American sources of Dy and Tb metals, which are critical inputs for high-performance permanent magnets used in defense and aerospace applications. The company's upstream foundation includes its Hoidas Lake rare earth asset in Saskatchewan and a network of allied feedstock and recycling partners.

The effort positions REalloys alongside MP Materials Corp., which operates the Mountain Pass mine in California and has been ramping its own downstream magnet production, and Lynas Rare Earths Ltd., which is expanding processing capacity in Australia and building a US facility in Texas. Unlike those producers, REalloys is focused specifically on heavy rare earths — Dy and Tb — which are harder to source outside China and command higher prices than light rare earths such as NdPr.

SRC's Rare Earth Processing Capacity

SRC, Canada's second-largest research and technology organization, is constructing what it says is the first fully integrated commercial rare earth processing facility independent of China. The organization has more than 400 employees and nearly 80 years of applied research experience, supporting 1,400 clients across more than 15 countries.

"SRC is on the cusp of powering on North America's first fully integrated Rare Earth Processing Facility, capable of producing commercial quantities of NdPr metals and Dy and Tb oxides," Mike Crabtree, president and CEO of SRC, said.

Successful qualification of the Q4 2026 materials can serve as a precursor to long-term commercial supply agreements with defense, aerospace, industrial and other permanent magnet producers, REalloys said. The company's Euclid, Ohio, facility already serves federal logistics and procurement agencies supporting the Defense Department, the Energy Department and NASA.

This article is for informational purposes only and does not constitute investment advice.