Last year, America required nearly 48,000 tons of rare earth magnets, but domestic supply met only 300 tons of this demand. Over 90 percent of the global supply of these magnets is provided by China, and given the new restrictions, this has become a serious challenge for U.S. defense contractors.
New Pentagon Restrictions
Starting January 1, 2027, the Pentagon will implement a new law that includes all stages of the magnet supply chain, from mineral extraction to final production. If any stage is conducted in China, Russia, Iran, or North Korea, defense contractors cannot deliver those magnets to the Pentagon. These changes pressure contractors to find a source outside of China.
Establishing a Supply Chain Outside of China
REalloys is working to establish a rare earth supply chain outside of China. The company is seeking to source dysprosium, terbium, and other rare earth materials for defense and industrial permanent magnets. The first high-purity materials are expected to be obtained from Saskatchewan in the fourth quarter of 2026.
In October 2025, China announced new, highly restrictive export regulations for rare earths. These regulations do not allow companies with ties to foreign military forces to obtain export licenses. However, these regulations have been suspended under a trade truce between Washington and Beijing. President Xi Jinping visited Washington last September, and the two sides only agreed to extend this truce until January 10.
Challenges in Magnet Supply
The U.S. Department of Defense is trying to overcome the shortage of rare earth materials and has invested billions of dollars in this area. However, domestic magnet production capacity will only reach about 5,000 tons by the end of 2026, while the need is around 48,000 tons. This means defense contractors must quickly change their supply chains.
Ultimately, REalloys is looking to strengthen its supply chain by bringing in Dr. Mohammad Imran as its Chief Operating Officer. Imran, who previously headed the rare earth division at the Saskatchewan Research Council, will help the company overcome existing challenges.
