The Army and a U.S.-based rare earth minerals and materials company on Tuesday took a step toward developing a heavy rare earth processing facility at a location in Utah as the U.S. looks to source the critical minerals outside of China.
REalloys Inc. and the Army executed a non-binding term sheet that outlines commercial terms for a potential lease to develop a rare earth processing facility at Tooele Army Depot in Utah. The move follows the selection of REalloys for the Army's Strategic Capital Initiative in June.
If the project moves forward under the provisions of the non-binding term sheet, it could see the development of the facility on about 200 acres at the base where it would process and refine target critical minerals, namely the heavy rare earth elements dysprosium and terbium. Those elements are used in things like high-temperature permanent magnets for precision-guided munitions, electric motors, sonar, radar and other defense systems.
REalloys CEO Lipi Sternheim told FOX Business that the project is about having "the goods that we need to keep the country running and to advance technology – almost all things technological today involve rare earth. Whether it's your cell phone or a jet fighter, it all involves rare earth."
Sternheim said that having the facility on a military base would help bring a key part of the rare earth supply chain under the military's purview to help ensure sufficient supplies of those elements for companies in the defense industrial base.
"It's not necessarily so much that Utah is the most strategic location of all places, it's just a military base that suits us, it's got the few hundred acres we need," he said.
"We're starting with pieces of the puzzle, but ultimately, if we should go down the road to finish from, I can't say mine because there's no mine on the base, but from oxides straight through to magnets, if we ever want to build that, there's the capability as well," he added.
Rare earths have become a point of geopolitical leverage between the U.S. and China in recent years, as the Chinese government began holding back rare earths from being exported to the U.S. or West.
"Once the cat's out of the bag, the U.S., the Western world out of China, has to – if they want to advance and live a good life – they have to come up with their own supply chains of these things so nobody can hold this leverage over them and decide when they're going to make their jets and when they're going to make their phones and when they aren't going to," Sternheim said.
The tension between the U.S. and China has caused businesses and the government to take steps to curb reliance on Chinese rare earths. While Sternheim cautioned that it would be "a misnomer to think that it will happen overnight," he sees a path to the Western world having its own supply chain for the critical minerals by 2029 or 2030.
Jeff Waksman, principal deputy assistant secretary of the Army for installations, energy and environment, said in a statement that "Rare earth processing is a known national security vulnerability, with China specifically holding a near 100% global monopoly on dysprosium and terbium."
"Leveraging our legal authorities and land, the U.S. Army is able to help nurture and expedite the growth of critical minerals industrial base which equips and sustains America's Soldiers without putting any taxpayer dollars at risk," Waksman added.
The next steps in the project will involve REalloys and the Army completing project development conditions and negotiating the final lease. Additionally, environmental reviews and permitting processes will occur in advance of the agreement being finalized.
The announcement of the term sheet also comes as the defense industrial base faces a looming deadline on Jan. 1, 2027, at which time firms making defense products will be banned from upstream sourcing of covered rare earths and magnets from countries including China, Russia, North Korea and Iran.
That rule, which is under the Defense Federal Acquisition Regulation Supplement or DFARS, applies only to defense contractors – so companies in other industries producing non-defense goods aren't subject to those restrictions.
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