Rare Earth Stocks: REalloys Lights Up As Iran War Stokes Demand

Rare earth stocks heated up this week as the Iran war highlights the indispensability of rare earths for Tomahawk missiles, Patriot interceptors, drones and most military hardware, all of which are in short supply relative to U.S. needs. REalloys (ALOY), which just started trading on the Nasdaq last week after merging into shell company Blackboxstocks, has been the standout among rare earth stocks, but the group remains quite volatile.

MP Materials (MP) and USA Rare Earth (USAR), the two rare earth plays in which the U.S. government is a major shareholder, broke higher early in the week, but have ducked back below key trendlines.

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Military escalation comes as aerospace and semiconductor firms already faced shortages of yttrium and scandium, two of the seven heavy rare earth minerals that China restricted the export of last April, Reuters has reported. The other heavy rare earths include samarium, gadolinium, dysprosium, terbium and lutetium.

Meanwhile, prices for both light and heavy rare earth oxides have been on the rise, easing investor concern about the Trump administration’s apparent decision not to offer price supports beyond its agreement with MP Materials.

REalloys Makes A Splash

REalloys, which surged 40.9% in its Nasdaq debut week, said on Tuesday that the Defense Logistics Agency had awarded it a contract “to scale next-generation metallothermal processes” for samarium and gadolinium. Reports indicate the contract is worth $1.7 million.

Samarium-cobalt magnets are able to withstand the extreme heat of fighter jet engines and supersonic friction of precision-guided munitions, the company says. Gadolinium is essential to stealth radar technology and the safe operation of control rods in nuclear reactors.

REalloys is expanding heavy rare earth processing capacity in Canada in a partnership with the Saskatchewan Research Council. The expansion, set to be operational in early 2027, targets annual production of 30 tons of dysprosium oxide, 15 tons of terbium oxide and 400 tons of neodymium-praseodymium (NdPr) oxide.

REalloys, which has a rare earth deposit in Saskatchewan, also plans to build an additional processing facility in the area as it establishes a mine-to-magnet supply chain for rare earths. Turning oxides into metals and magnet components will occur at its Euclid, Ohio, facility.

MP Materials Gets Heavy

REalloys said it’s on track to become the largest producer of heavy rare earth oxides and metals outside China in the first half of 2027. However, it has competition. James Litinksy, MP Materials CEO, said on the Feb. 27 earnings call that his company is on track to produce separated dysprosium and terbium late this year. Those two rare earths improve resistance to demagnetization at high temperatures.

Litinksy said MP expects to be the largest of producer of heavy rare earths in the Western Hemisphere “from now for as long as you can imagine.” Still, he’s much more bullish on NdPr than heavy rare earths, saying that market may get “quite saturated over the next few years.”

MP expects “long-term demand, growth and pricing strength for NdPr to far outpace that of dysprosium and terbium.” That’s partly due to MP’s own proprietary process that “uses approximately 60% less heavy rare earth content than originally anticipated” for high-performance EV-grade magnets. Further, MP expects robust NdPr magnet demand as physical AI and humanoid robot applications take off.

“I think NdPr is really the growth commodity,” Litinsky said. While that runs somewhat counter to recent market price movements, he added that “commodities prices can always do crazy things.”

Rare Earth Prices

Ucore Rare Metals (UURAF), which trades over the counter and is building a plant in Louisiana, issued a news release on Feb. 23 detailing price increases for rare earth oxides, especially the heavy rare earths whose export China has restricted based on their defense-industry importance.

Ucore said that dysprosium oxide prices recently increased to over $200 per kg in China and to $1,000/kg outside China. Terbium oxide has climbed to $900/kg in China and $4,500/kg outside of China.

As for light rare earth pricing, the price of neodymium-praseodymium (NdPr) oxide has more than doubled since July, when the Pentagon agreed to ensure a price floor of $110 per kilogram. NdPr has climbed to $120/kg in China and as high as $140/kg in North America, Ucore said.

Rare earth stocks backtracked after the Trump administration declined to provide similar price support to USA Rare Earth as part of the government’s investment in the company in January.

Nova Scotia-based Ucore has received $22.4 million in U.S. Defense Department funding. The company says its RapidSX technology platform is able to process rare earths at triple the rate of conventional processing and requires a smaller footprint.

Rare Earth Company Updates

USA Rare Earth is close to opening up a magnet facility in Stillwater. In September, the company acquired U.K.-based Less Common Metals, which had won a U.S. Defense Department grant to expand samarium metal production in the U.K. in support of U.S. industry needs.

USA Rare Earth said in December that it would accelerate its timeline for mining its Round Top heavy rare earth deposit in Texas, with commercial production now targeted for late 2028. On Thursday, the company said it’s paying $73 million in USAR stock to gain full ownership of the Round Top project by acquiring the minority owner.

NioCorp Developments (NB) says it’s on track to begin construction at its Elk Creek, Nebraska, project this year. It plans to produce 104 tons of scandium oxide a year, making it North America’s largest producer. NioCorp has a patented technology for producing scandium metal that is set for demonstration in the first quarter of 2026. It also supplies aluminum-scandium alloy components for next-generation fighter platforms as part of a $10 million Pentagon-funded joint development program with Lockheed Martin’s Skunk Works.

American Resources’ (AREC) minority-owned subsidiary ReElement Technologies is building out rare earth refining capacity at a Marion, Indiana, facility. A Jan. 21 note from William Blair analyst Neal Dingmann said its yttrium/gadolinium production line scaled to a rate of 1,500 tons per year from a 500-ton rate within weeks “due to stronger-than-expected demand.”

ReElement has a “unique process to separate and refine rare earth elements that achieves near 100% purity,” Dingmann has noted. On Nov. 3, ReElement announced $80 million in funding from the Pentagon’s Office of Strategic Capital. The loan was part of $1.4 billion in public and private funding to ReElement and Vulcan Elements for their partnership to scale up to 10,000 metric tons of rare earth magnet production.

Australia’s Lynas Rare Earths (LYSCF) is expanding heavy rare earth processing in Malaysia to add capacity to process yttrium as well as samarium.

ALOY, MP, USAR

REalloys, which surged 40.9% in its Nasdaq debut week, has climbed another 15% this week through Thursday afternoon, despite coming well off Wednesday’s high point. As of March 4, FactSet says the company has a $1.5 billion market cap and no analyst coverage listed.

MP surged 8.3% to 63.73 on Monday, but had slipped into negative territory for the week by Thursday afternoon. Action in USA Rare Earth was similar, with a 10.4% move on Monday that was erased by late in the week. Still, a move past Monday’s highs for either MP or USAR could offer an early entry opportunity as shares break above the trendline sloping down from recent highs and move clear of their 50-day moving averages.

Yet the volatility this week is an example of what makes this group hard to trade, particularly the less-established names, since it’s easy to get shaken out with a loss. In the current environment, stocks with a 21-day average true range above 8% shouldn’t make up a substantial part of your portfolio. According to MarketSurge, MP has a 21-day ATR of 6.3%, below that of USAR (9.2%) and REalloys (17.5%).

Be sure to read IBD’s The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.

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