Pentagon Contract Aims to End U.S. Reliance on Foreign Rare Earths

BOCA RATON, FL – March 02, 2026 – The U.S. Department of Defense has taken a significant step toward breaking its total dependence on foreign adversaries for a class of critical rare earth metals essential for advanced weaponry and aerospace platforms. The Defense Logistics Agency (DLA) has awarded a contract to REalloys Inc. (NASDAQ: ALOY) to scale up domestic production of Samarium (Sm) and Gadolinium (Gd), metals that form the invisible backbone of America's most sophisticated defense technologies.

The contract, awarded to REalloys' subsidiary Terves LLC, will fund the development of a next-generation production facility designed to eliminate a glaring vulnerability in the nation's defense industrial base. Currently, the United States is 100% reliant on offshore sources, primarily China, for the separated metal forms of Sm and Gd, creating a single point of failure for critical military supply chains.

Valued at up to $1.7 million over a 24-month period, the DLA award tasks REalloys with creating the engineering designs for a 300-ton-per-year modular production plant. This initiative represents a historic breakthrough, validating a new technological approach that could reshape the economics of rare earth production and secure a sovereign supply of materials that have no substitutes in extreme operating environments.

A Strategic Imperative: Closing a National Security Gap

The Pentagon’s move addresses a long-standing strategic vulnerability. For years, defense planners have warned about the risks associated with relying on geopolitical rivals for materials crucial to national security. Samarium-Cobalt (SmCo) magnets are the only magnetic material capable of withstanding the extreme heat inside fighter jet engines and the supersonic friction endured by precision-guided munitions. Gadolinium is equally vital, serving as a key component in stealth radar technology and as an essential neutron-absorber in the safety control rods of nuclear reactors.

"The U.S. has been 100% dependent on offshore sources for the separated metal forms of these elements, creating a single point of failure for national security," the company noted in its announcement. This DLA contract directly confronts that vulnerability.

The DLA, the nation's combat logistics support agency, manages the National Defense Stockpile through its Strategic Materials division. The agency has been actively seeking to secure domestic sources of critical materials. An August 2025 Request for Information (RFI) from the DLA underscored the scale of the need, signaling its intent to acquire approximately 900 metric tons of Gadolinium oxide and 3,500 metric tons of Samarium oxide for the stockpile. The RFI noted the difficulty of sourcing this specific mix of elements, known as Samarium-Europium-Gadolinium (SEG), due to their chemical similarities, making REalloys' specialized processing technology particularly relevant.

A Technological Breakthrough in Metal Production

At the heart of the DLA contract is REalloys' proprietary technology, which promises to be more efficient, less costly, and more environmentally sound than conventional methods. The company is pioneering a 'zero-waste' metallothermal process and a 'direct reduction' technique for SEG feedstocks, a significant departure from traditional rare earth processing.

Conventional methods typically rely on massive, capital-intensive solvent extraction plants that are complex to operate and generate substantial chemical waste. In contrast, REalloys is developing a modular, semi-continuous processing architecture. This approach allows for the direct conversion of rare earth feedstocks into high-purity metals, including alloyed forms like Gadolinium-Cobalt, through a low-temperature reduction process.

The company has filed a provisional patent for this platform, which it believes can reduce production costs by up to 50%. The modular design of the planned 300 ton/year facility is a key advantage, enabling reactors to be rapidly deployed, replicated, and scaled to meet both steady-state defense needs and surge demand during a national emergency.

This contract builds on the past efforts of Terves LLC, which REalloys acquired in March 2025. Terves has a history of successful research and development for federal agencies, including a previous DLA-funded program to develop pilot-scale production of gadolinium metal. The new contract will scale this capability while adding direct Samarium metal production, addressing a persistent bottleneck in the U.S. supply chain.

Rebuilding America's Industrial Base, Mine-to-Magnet

This initiative is a cornerstone of REalloys' broader strategy to build a fully integrated, North American "mine-to-magnet" supply chain. The DLA contract focuses on the critical 'midstream' processing step, but the company's vision encompasses the entire value chain, from raw materials to finished high-performance components.

REalloys' upstream assets include its Hoidas Lake rare earth project in Saskatchewan, Canada. In partnership with the Saskatchewan Research Council, the company is establishing a platform to process heavy rare earth materials from allied and domestic sources. These materials will feed midstream facilities like the one being designed under the DLA contract.

The final high-purity metals and alloys will then move to REalloys' downstream manufacturing operations in Euclid, Ohio. This facility already produces advanced metals, alloys, and magnet components for federal agencies, including the Department of Defense and NASA, as well as the wider defense industrial base.

The company's recent listing on the NASDAQ stock exchange, following a merger with Blackboxstocks that closed in late February 2026, provides the corporate structure to pursue this ambitious, capital-intensive strategy. By integrating every step of the process on North American soil, REalloys aims not only to secure the supply of Sm and Gd but also to revitalize a segment of the domestic industrial base that was offshored decades ago. This contract serves as a powerful endorsement of that vision, signaling a new era of public-private partnership aimed at ensuring the United States can build and sustain the foundational technologies of its own defense.