How A Magnet Shortage Could Bring The $10 Trillion Tech Sector to a Halt

REalloys (: ALOY) is assembling the only non-Chinese supply chain for a component powering nearly everything the modern economy runs on - but one that almost nobody outside the industry pays attention to.

A single F-35 carries roughly 435 kilograms of these materials. MRI machines need them to power today's medical imaging. They’re in the guidance systems on missiles, the haptic feedback in your phone, the motors inside surgical robots, and the cooling systems that keep data centers running.

Today, the rare earth magnet market itself is worth roughly $20 billion and heading toward $30 billion by 2030. But the products that depend on those magnets - everything from fighter jets and medical systems to smartphones, robots, and wind turbines - represent an economy worth trillions of dollars.

And roughly 90% of rare earth processing, and 93% of magnet manufacturing, takes place in China.

We already know what happens when that supply gets squeezed. When China tightened export controls on rare earths in 2025, Ford had to shut down Explorer production because it couldn’t get the magnets it needed.

Ford CEO Jim Farley said the company’s magnet supply was “day to day” and “hand to mouth.” European auto suppliers (CLEPA) reported factory lines going dark across the continent for the same reason.

As REalloys’ Head of R&D Andy Sherman put it in a recent interview: “If alloy supply is disrupted, production lines do not slow gracefully. They stop. Substitutions are rarely possible, requalification takes years, and readiness gaps appear immediately.”

And there’s no substitute waiting in the wings. That’s because the magnetic properties of elements like neodymium, dysprosium, and terbium are tied to where they sit on the periodic table - nothing else delivers the same performance. Which means whoever controls the processing controls everything downstream. That’s the position REalloys has been building toward.

The Bottleneck That Actually Matters

There’s a common assumption that the rare earth problem is about mining - that if the West just dug more rock out of the ground, the dependency would go away.

But as Sherman put it: “You can have rock in the ground and still be dependent if you don’t control what happens after extraction.”

In the global commodities market, raw rare earth concentrates are often treated as a rounding error compared to the massive volumes of iron and nickel moved by Vale (NYSE:VALE) or BHP (NYSE:BHP). However, the Pentagon and major aerospace manufacturers do not buy "rock"; they require finished metals and alloys-materials with exact, repeatable specifications that can pass years of rigorous qualification testing.

Raw rare earth concentrates trade on the open market. But what the Pentagon and major manufacturers actually need are finished metals and alloys - materials with exact, repeatable specs that can pass years of qualification testing.

That final step - taking rare earth metals, combining them with other elements in precise ratios, producing alloys with specific properties, and doing it the same way batch after batch at scale - is where the real bottleneck sits. Almost nobody outside China can do it today.

That’s why REalloys (: ALOY) acquired PMT Critical Metals with a metallization facility in Euclid, Ohio, and nearly a decade of rare earth and magnet R&D with the U.S. Department of Defense and Energy. And it has locked in an exclusive offtake covering 80% of production from the Saskatchewan Research Council’s Rare Earth Processing Facility - the only operational, fully non-Chinese processing plant in North America.

Feedstock comes from North America, Brazil, Kazakhstan, and Greenland. In a world where China controls the vast majority of rare earth processing, REalloys has ensured they don’t depend on Chinese inputs at any stage - not in the technology, the chemicals, the equipment, or the capital.

That matters because defense qualification isn't something you can rush. Testing and certification can take years - and there are no shortcuts.

Once you're qualified into a program, you've built a moat that compounds over time. In other words, REalloys has already cleared a barrier that takes others three to seven years to even attempt.

The urgency of this timeline is not lost on the broader industry. Even as Rio Tinto (NYSE:RIO) and Vale (NYSE:VALE) scramble to expand their critical mineral portfolios to include lithium and copper for the energy transition, the "refined" end of the magnet funnel remains dangerously narrow. Starting from scratch in this environment is a multi-year gamble that most industrial players are not yet equipped to win.

Why the Window Is Closing

Starting next year, every defense contractor in the country is about to face the same question: where do your rare earths actually come from?

On January 1, 2027, the Pentagon’s DFARS rules will require defense contractors to prove where every rare earth input comes from - Chinese-sourced materials will be banned at every step, from the mine through to the finished magnet.

Any contractor that can’t show a clean, non-Chinese supply chain risks losing its contracts.

At the same time, the demand side is accelerating. McKinsey projects that global demand for the rare earths used in magnets will nearly triple by 2035. The IEA expects a 50–60% jump in total rare earth demand by 2040, driven by electric vehicles and wind power.

So the picture is this: a regulatory deadline that forces contractors to find non-Chinese sources, demand that’s set to triple, and a competitive landscape where starting from scratch takes three to seven years. Only one Western company is already in the pipeline.

What REalloys Controls

When Ford’s Explorer line went dark and European factories followed, the missing piece wasn’t ore in the ground or even processed metals as most people think.

It was finished magnets - components with exact, repeatable specifications that took years to qualify into those production lines. That’s the chokepoint REalloys has built around.

The Saskatchewan plant that supplies REalloys is expected to reach full production in 2027, starting at roughly 400 tonnes of refined rare earth metals per year and scaling to 600 tonnes by late 2028.

REalloys controls the vast majority of that output through its exclusive offtake agreement - and its Ohio facility converts those metals into the alloys and magnets that defense and industrial customers actually buy.

What makes REalloys’ position particularly hard to replicate is which rare earths it has locked in. Dysprosium and Terbium are the elements that keep magnets functioning under extreme heat and stress - the difference between a magnet that works inside a washing machine and one that holds up inside a jet turbine or missile guidance system.

They’re among the scarcest materials in the supply chain, almost entirely controlled by China, and they’re exactly what REalloys’ Phase 2 expansion is built to deliver at scale - targeting 20,000 tonnes per year of heavy rare earth permanent magnets, which would make the company the largest non-Chinese supplier of these materials by a wide margin.

At that scale, the supply chain starts to look different. Every F-35 engine, every MRI scanner, every guided missile, and every industrial robot on a factory floor depends on a component most people will never see. And right now, nearly all of those components come from one country. REalloys is building the alternative - and the clock is already running.

By. Charles Kennedy

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