The U.S. Army has selected REalloys to establish the first commercial critical mineral processing operation on a military installation at the Tooele Army Depot in Utah. This strategic move aims to rebuild the domestic heavy rare earth supply chain and eliminate dependence on Chinese materials by 2027.
The integration of commercial processing directly into national security infrastructure marks a significant shift in how the U.S. secures critical minerals. By utilizing an Enhanced Use Lease structure, the Army allows REalloys to finance and operate the facility on federal land while maintaining private ownership and operations.
The Tooele Army Depot and the 2027 Deadline
The timing of the Tooele project is not accidental. Commercial development is targeted to begin in 2027, with initial operating capability expected no later than 2028.
The facility will specifically focus on refining dysprosium and terbium. These two heavy rare earth elements are critical for producing high-temperature permanent magnets used in various defense systems. The platform is expected to provide support for several major agencies, including the U.S. Army, the Department of Energy, NASA, and the Defense Logistics Agency.
REalloys’ Supply Chain Integration
The Army’s selection of REalloys follows previous support from the Defense Logistics Agency, which contracted the company to expand domestic production of gadolinium and samarium metals. The new Utah project pushes the company further upstream in the supply chain.
- Saskatchewan Research Council: REalloys committed approximately $20.6 million to upgrades at this facility, securing exclusive supply rights for 80% of its expanded output, including terbium and dysprosium oxides and NdPr metal.
- Critical Metals: A definitive long-term offtake agreement for 15% of Phase 1 production from the Tanbreez project in Greenland.
- Domestic Sources: A strategic alliance tied to the Sheep Creek deposit in Montana and a proposed supply framework for coal-hosted rare earth material from Ramaco Resources’ Brook Mine in Wyoming.
This vertical integration allows REalloys to manage the process from feedstock and processing to metallization and alloys, eventually leading to the production of permanent magnets at its manufacturing base in Euclid, Ohio.
Economic Pressures and Middle East Volatility
While the U.S. accelerates its industrial buildout, broader economic conditions remain unstable. U.S. consumer inflation slowed more than expected in June, with the Consumer Price Index (CPI) increasing 3.5% year-on-year, missing market expectations of a 3.8% rise. According to Reuters, a 5.7% drop in energy prices—the largest monthly decline since April 2020—drove much of this moderation.
However, this cooling was short-lived. Recent escalations in hostilities between the U.S. and Iran have reintroduced significant upside risks. A ceasefire collapsed after commercial tankers were fired upon in the Strait of Hormuz, leading to military strikes and a U.S. naval blockade of Iran. These events have already pushed gasoline prices higher, rising to $3.86 a gallon as of Tuesday from $3.79 a week prior.
This volatility complicates the Federal Reserve’s path. Despite the June CPI dip, Fed Chair Kevin Warsh indicated to lawmakers that the central bank has no tolerance for persistently elevated inflation. Financial markets currently see a roughly 60% chance of a rate hike in September, as the balance of risks shifts back toward inflation due to the Gulf conflict.
Aviation Recovery Amid Regional Conflict
The instability in the Middle East is also impacting regional logistics and aviation. While capacity had begun to rebound following earlier strikes on Iran, aviationweek.com reports that July scheduled capacity remains 6.9% below July 2025 levels.
| Country/Carrier | July Capacity Status |
|---|---|
| Israel | Up 31.2% year-over-year |
| Saudi Arabia | Up 0.7% year-over-year |
| UAE | ~13% lower than July 2025 |
| Iran | Down 29.5% year-over-year |
| Iraq | Down nearly 34% year-over-year |
Israeli carriers like Arkia (up 78.4%) and El Al (up 10%) are filling gaps left by international operators. Conversely, the markets closest to the conflict, such as Iran and Iraq, show the weakest recoveries, with Tehran Imam Khomeini International Airport’s departing seats down 52% from a year earlier.
The convergence of these events—the urgent domesticating of rare earth processing, fluctuating inflation, and recurring military tensions in the Gulf—highlights a precarious transition for U.S. industrial policy. The success of the Tooele Army Depot project now depends on whether REalloys can meet its 2027 operational goals before the federal procurement ban takes full effect.
Keep reading
