Clear Street Initiates Buy Rating on REalloys as Rare Earth Crunch Intensifies

Wall Street is starting to price who can actually deliver rare earth supply inside the United States, not just extract it from the ground, initiating coverage on REalloys as it moves to expand the first commercial-scale rare earths metallization facility in North America.

Most rare earth material still runs through China before it reaches the end user, but in fewer than nine months, these China-origin materials will be fully banned from use in U.S. defense systems. That shrinks the supply base overnight.

Very few companies are even trying to build a supply chain that stays inside North America from start to finish. A new Buy rating on REalloys with a $35 price target recognizes that capability is already in place.

Clear Street initiated coverage on REalloys (NASDAQ: ALOY) with a Buy rating and a $35 price target. The call is straightforward: the upside is tied to execution. If the company delivers on its buildout, the current valuation does not reflect what that system could look like once it is running at scale.

What they are valuing is not exposure to rare earth prices. It is ownership of the chain inside North America. REalloys is not mining. It’s doing something more critical and complicated: It’s taking feedstock, processing it into metals and alloys, and moving toward magnet production, all inside one system that does not rely on China.

Clear Street calls it a “mine-to-magnet” buildout, with verified North American sourcing and full control over the supply chain.

China still controls roughly 80-85% of the global magnet supply chain, and the United States imports more than 85% of all the rare earth material it uses. Clear Street points out that the U.S. is decades behind on processing and manufacturing capacity, not just mining. Starting in January 2027, Chinese-origin NdFeB magnets cannot be used in U.S. defense systems. That forces a shift toward material that can be sourced, processed, and delivered inside North America, with full traceability. REalloys is already building that.

Buildout Timeline: From Metals to Magnets

Phase one is expected to be operational in 2027. REalloys moves into domestic production of high-purity rare earth metals and alloys, using a mix of recycled magnets and mined feedstock. This is the point where material is produced inside the United States and can move through a traceable supply chain. The Phase one buildout needs an additional $50 million in cash which it has already dedicated.

Phase one heavy rare earth metallization runs through the Euclid, Ohio facility, where REalloys already performs metallothermic reduction to convert rare earth oxides into metal and alloy form. Feedstock oxides are expected to be produced from both recycled magnets and upstream supply agreements, with the material moving through reduction and alloying in-house before leaving as finished product.

Phase two is expected to extend that system. By 2029, the plan is to add magnet manufacturing in Ohio. That brings the operation from processed material into finished components, using feedstock from Hoidas Lake and other North American sources.

Clear Street calls the 2027 China-origin rare earths ban a “key catalyst” for ALOY right now, and sees Phase 2 magnet production as the point where the economics really change.

Instead of selling metal and alloy into someone else’s system, REalloys would be producing NdFeB magnets itself, keeping that margin inside the company. The Ohio location keeps that production tied directly to the existing metallization work, with feedstock moving from oxide to metal to finished magnet without leaving the country. Hoidas Lake adds a dedicated source of material, with additional supply expected from other North American partners to support volume as production ramps.

“This is about building a supply chain the United States actually controls, from input to finished product, without relying on foreign processing,” Joe Kasper, former Chief of Staff to the U.S. Secretary of Defense and now Chairman of REalloys’ advisory board, told Oilprice.com this week. “If the U.S. can’t process and manufacture these materials domestically, then it does not have a rare earths supply chain at all.”

Wall Street Bets on Big Defense Names Amid Global Uncertainty

Kasper, brought on board earlier this month, isn’t the only American defense establishment name in the REalloys line-up. He joins General Jack Keane, former Vice Chief of Staff of the U.S. Army, and Stephen duMont, president of GM Defense.

These are the people who’ve run defense procurement from the inside, the ones who know how to get qualified, how to get funded, and how to end up supplying materials into weapons systems.

The Iran conflict is burning through billions of dollars in precision-guided munitions. These systems run on rare earth materials, and they’re getting used up faster than they can be replaced.

At the same time, supply is tightening. Reuters has pointed to reduced availability of key materials, with some defense-linked inventories down to a matter of months if disruptions continue.

“You can’t fight a 21st-century war with twentieth-century supply chains,” said Lipi Sternheim, CEO of REalloys. “Modern weapons rely on materials that are difficult to source, difficult to process, and difficult to replace once inventories begin to tighten.”

Outside China, buyers are already paying up. Europe is clearing material at two to three times the levels quoted inside China. That’s how this market works. Supply is tight, buyers step in when they have to, and price follows.

And it’s not just defense.

The pressure is already building across the broader industrial and technology stack. Companies like Apple Inc. are deeply exposed to rare earth supply chains through consumer electronics, where magnets are critical components in everything from smartphones to wearables.

Machinery giant Caterpillar Inc. relies on rare earth-based components across advanced machinery, electrification systems, and next-generation equipment. As industrial players move toward more electrified and automated platforms, exposure to magnet supply chains only increases. That creates a broader demand base beyond defense, reinforcing the structural need for domestic processing and magnet production capacity.

Ahead of 2027, the deals are stacking up

And, thankfully, things are moving quickly with less than a year before the January 1, 2027 cutoff. REalloys has started locking in upstream supply and tightening control over where its material comes from and how it moves through the system.

In early April, the company signed a memorandum of understanding with U.S. Critical Materials to secure up to 10% of production from the Sheep Creek deposit in Montana. The asset carries high concentrations of dysprosium and terbium, the heavy rare earths used in high-performance magnets across missile systems, radar, and fighter aircraft.

The structure of the agreement points to where this is going. REalloys is not just sourcing material. It is aligning that supply directly with its midstream and downstream system, with a stated focus on keeping the entire chain inside North America and removing Chinese involvement at every stage.

More importantly, this is happening on a compressed timeline. Both companies are moving to advance test work on heavy rare earth processing and are targeting a long-term offtake agreement within a year, putting real milestones in place ahead of the 2027 deadline.

By. Michael Kern

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Ahead of 2027, the deals are stacking up

And, thankfully, things are moving quickly with less than a year before the January 1, 2027 cutoff. REalloys has started locking in upstream supply and tightening control over where its material comes from and how it moves through the system.

In early April, the company signed a memorandum of understanding with U.S. Critical Materials to secure up to 10% of production from the Sheep Creek deposit in Montana. The asset carries high concentrations of dysprosium and terbium, the heavy rare earths used in high-performance magnets across missile systems, radar, and fighter aircraft.

The structure of the agreement points to where this is going. REalloys is not just sourcing material. It is aligning that supply directly with its midstream and downstream system, with a stated focus on keeping the entire chain inside North America and removing Chinese involvement at every stage.

More importantly, this is happening on a compressed timeline. Both companies are moving to advance test work on heavy rare earth processing and are targeting a long-term offtake agreement within a year, putting real milestones in place ahead of the 2027 deadline.

By. Michael Kern