OilPrice.com Market Commentary
New York, NY – February 26, 2026 – The struggle for geopolitical supremacy is rapidly becoming a struggle over one critical resource – rare earth magnets. They will determine whether the United States can build military equipment at scale, whether weapons can be replaced as fast as they are used, and whether industry can keep pace with demand across an economy measured in the tens of trillions of dollars. Companies mentioned in this release include: REalloys Inc. (ALOY), Microsoft (NASDAQ: MSFT), NVIDIA (NASDAQ: NVDA), Alphabet (NASDAQ: GOOGL), Tesla, Inc. (NASDAQ: TSLA), General Motors Company (NYSE: GM).
For the United States, winning this strategic competition hinges on a single, difficult capability: the domestic production of magnet materials at scale. While many other Western firms are very early in the exploration stage or ‘paper’ phase of developing processing capabilities, one company is already operational and processing metals.
Based in Euclid, Ohio, REalloys (ALOY) operates North America’s only facility that has converted heavy rare earths into the high-performance metals and alloys required for defense systems. By bridging the gap between raw oxides and finished magnets, they have moved beyond the industry’s theoretical roadmaps to provide a functioning supply chain that feeds American factories and weapons programs today.
The company has non-binding agreements in place for long-term feedstock from North America, Kazakhstan, Greenland, and Brazil and processes it directly in the United States, eliminating offshore detours. It is already supplying qualified metals and alloys under U.S. Department of Defense contracts as sourcing rules tighten toward fully domestic material.
What the DoD Needs Urgently
The U.S. military is working with REalloys for rare earth metals and alloys for use in active programs. The company produces defense-grade metal and alloy domestically, to specifications already embedded in program supply chains. As sourcing rules change in 2027 and Chinese material becomes ineligible, that same material remains compliant without modification. No other North American supplier currently produces the same class of qualified heavy rare earth metals and alloys. And in our opinion it is unlikely they will have the capabilities to do so at scale for at least another 3 years.
Heavy rare earths keep modern missile and aerospace systems operating under extreme conditions. Dysprosium and terbium are added to magnet alloys to preserve magnetic strength when temperatures rise or when vibration intensifies.
That makes heavy rare earths absolutely vital to things like precision-guided missiles and missile-defense interceptors. Dysprosium and terbium are non-negotiable inputs for these weapons systems.
Where REalloys Ranks in the Magnet War
Strip away the rhetoric, and the U.S. rare earth landscape collapses fast. Most companies are still upstream, with mines, oxides, separation pilots, and PowerPoint roadmaps. REalloys is firmly downstream, where supply chains either function or fail.
They have an executed commercial processing and long-term offtake agreement with the Saskatchewan Research Council (SRC) tied to SRC’s Rare Earth Processing Facility in Saskatoon. Under that agreement, REalloys (ALOY) secures 80% of annual production from the upgraded capacity, with supply structured on a cost-plus model. Heavy rare earth production from the upgraded facility is expected to begin in early 2027, positioning REalloys as the only commercial-scale supplier of dysprosium and terbium oxides in North America.
They are also committing approximately US$21 million to expand the facility to lift heavy rare earth processing capacity by about 300% and increasing light rare earth (NdPr) capacity by 50%. The design output is up to 30 tonnes of dysprosium oxide, 15 tonnes of terbium oxide, and 400 tonnes per year of high-purity NdPr metal, with NdPr increasing to 600 tonnes per year after the expansion is complete, with first production slated for early next year.
LOI’s are in place for feedstock from Kazakhstan, Brazil, and Greenland.
In Kazakhstan, they have secured a non-binding long-term offtake agreement with AltynGroup for rare-earth feedstock containing both light and heavy rare-earth elements, including dysprosium and terbium.
That raw material will feed directly into REalloys’ U.S. metals and alloy production rather than being routed offshore.
In Brazil, the company has signed an offtake memorandum with St George Mining that outlines access to up to 40% of rare earth production from the country’s Araxá project, subject to definitive agreements.
In Greenland, they have a 10-year offtake arrangement (at LOI stage) under which it expects to supply REalloys up to 15% of annual production from the Tanbreez project’s rare earth concentrate.
The final destination is the Department of Defense.
Their Euclid, Ohio facility is designed to separate rare earth oxides which are reduced into metal under controlled atmospheres and alloyed into magnet-grade compositions. Both light and heavy rare earths, including dysprosium and terbium, will be processed at this facility within the same metallurgical workflow. Output is produced as pre-alloyed metal, with chemistry set upstream and held to tight tolerances required for qualified magnet production. This places Euclid between separation and magnet manufacturing, at the point where rare earths become usable inputs rather than intermediates.
The material is bought through ordinary commercial supply relationships and moves directly into magnets and components supplied to the DoD.
America Rebuilds Under Strategic Threat
For the first time in decades, the United States is rebuilding a rare-earth supply chain under active Chinese pressure.
It is doing so under deliberate Chinese pressure on the processed materials that keep weapons programs and factories running.
Almost no one outside China can reliably turn rare earth oxides into finished metal on an industrial scale.
That step turning rare earth oxides into usable metals is where most Western supply chains quietly gave up decades ago.
The Center for Strategic and International Studies (CSIS) identifies rare-earth metallization and alloying as the least developed and most difficult capability to rebuild outside China. In its work on supply-chain resilience, CSIS describes metal and alloy production as an experience-driven bottleneck–one that cannot be recreated quickly, even with funding in place.
The CSIS makes this clear: rare-earth metallization is learned over long operating histories, not built on a schedule. Reaching stable, magnet-grade output can take many years and, in some cases, decades. Mines can be built, but metallization cannot be rushed.
While most Western efforts stop at oxides or pilot separation, Realloys (ALOY) is operating at the conversion step CSIS identifies as the hardest to rebuild. At Euclid, oxide becomes metal, metal becomes alloy, and chemistry is held inside specifications already accepted downstream. That work is happening now, inside an operating U.S. facility.
They operate at the conversion layer CSIS identifies as the hardest capability to rebuild outside China. The separated rare earth oxides reduced into metal and alloyed to magnet-grade specifications at Euclid will be used downstream. The process runs under controlled atmospheres, with chemistry set upstream and held within tight tolerances across repeated production runs.
That capability is rare because the U.S. abandoned it decades ago and it can’t be rebuilt quickly. It requires operating history, not construction schedules. It exists here, inside an operating U.S. facility, feeding magnet and defense supply chains with usable material rather than intermediates.
This capability sets the limits of the rebuild, and of U.S. industrial and defense capacity.
Here are other companies that are reliant on heavy rare earth elements and why they are so important to their businesses:
Microsoft (NASDAQ: MSFT) has become a pivotal architect of the “Circular Rare Earth Economy,” shifting its strategy from simple procurement to large-scale urban mining. In early 2025, Microsoft achieved a major breakthrough by launching a commercial-scale Rare Earth Material Capture Program in collaboration with Western Digital. By decommissioning and shredding approximately 50,000 pounds of end-of-life hard disk drives (HDDs) from its global data centers, Microsoft demonstrated an acid-free, environmentally friendly process that recovers over 90% of the neodymium and praseodymium (NdPr) used in high-performance magnets.
Beyond recycling, Microsoft is a major backer of AI-driven mineral discovery through KoBold Metals, an exploration firm co-founded with Bill Gates. By 2026, Microsoft has integrated its Azure high-performance computing (HPC) power with KoBold’s “Machine Prospector” to identify “Tier 1” critical mineral deposits in regions previously thought to be exhausted, such as Western Australia and Sub-Saharan Africa.
NVIDIA (NASDAQ: NVDA) is the “technological engine” powering the modernization of the rare earth industry, moving from supplying GPUs to creating the “AI Factory” for mining. At CES 2026, NVIDIA and Caterpillar (CAT) announced an expanded collaboration to deploy “Physical AI” across mining sites globally. By integrating the NVIDIA Jetson Thor platform into autonomous mining fleets, NVIDIA has enabled machines to process billions of data points in milliseconds, allowing for high-precision extraction in complex environments.
Crucially, NVIDIA has pioneered the use of Digital Twins for rare earth refineries through its Omniverse platform. In 2026, facilities like the Saskatchewan Research Council (SRC) and MP Materials utilize NVIDIA’s OpenUSD-based simulations to model the chemical behavior of rare earth separation at a molecular level. This “Simulation-First” approach allows engineers to optimize the proprietary solvent extraction (SX) cells, the most guarded and difficult step of rare earth processing, without wasting expensive chemical reagents.
Alphabet (NASDAQ: GOOGL), through DeepMind and Google Cloud, has positioned itself as the “automated chemist” of the rare earth industry. In early 2026, Google DeepMind unveiled GNoME 3.0 (Graph Networks for Materials Exploration), an AI model that predicted over 2 million new crystalline structures, many of which are specifically designed to be high-performance, rare-earth-free permanent magnets. By simulating new material combinations that mimic the magnetic properties of neodymium but use more abundant elements like iron and nitrogen, Google is working to “engineer out” the vulnerability of the rare earth supply chain entirely.
In the immediate term, Google Cloud is the data backbone for the Saskatchewan Research Council’s (SRC) AI-powered separation facility. Google’s Vertex AI models are the brains behind the facility’s “micro-adjustment” sensors, which coordinate the flow of thousands of chemical tanks to separate the 17 chemically identical rare earth elements.
Tesla, Inc. (NASDAQ: TSLA) remains one of the most influential industrial demand drivers for critical minerals and magnetic materials globally. Although its core business is electric vehicles and energy storage, Tesla’s design choices in traction motors, battery chemistry, and material sourcing have profound implications for rare earths, nickel, lithium, and cobalt markets. Major EVs typically incorporate neodymium-praseodymium magnets in their motors, and even as Tesla explores designs with reduced rare earth content, the underlying demand for high-performance permanent magnets and advanced battery metals continues to shape supplier strategy.
Tesla’s high-volume manufacturing footprint, global supply agreements, and influence on EV battery chemistries make it a bellwether for critical mineral demand trends, particularly in North America and Europe, where domestic supply diversification remains a strategic priority.
General Motors Company (NYSE: GM)
General Motors has expanded its upstream exposure as access to battery raw materials increasingly dictates EV scaling timelines. The automaker continues to secure direct stakes and long-term contracts across the lithium, nickel, and cobalt value chains to underpin its Ultium platform.
Its investment in Lithium Americas’ Thacker Pass project provides priority access to Phase 1 lithium supply, supporting full U.S. tax credit eligibility under current IRA guidelines. GM has also expanded nickel and cobalt supply arrangements with global miners to diversify sourcing.
Downstream integration continues through cathode joint ventures in North America and battery recycling partnerships designed to recover high percentages of lithium, nickel, and cobalt from scrap and end-of-life packs, reducing long-term primary material exposure.
By. Josh Owens
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.
IMPORTANT NOTICE AND DISCLAIMER
Neither the author nor the publisher, Oilprice.com, was paid to publish this communication concerning REalloys (ALOY). 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.
OilPrice.com
+44 203 239 4080
SOURCE: Oilprice.com
The post Why Rare Earth Magnets Are the Real Battlefield Between the U.S. and China appeared first on Financial News Media.
