Photo: Wade Mathews / U.S. Army (archive)
The U.S. Army and REalloys have signed a nonbinding term sheet for a potential heavy rare-earth processing facility at Tooele Army Depot in Utah, a step toward bringing production of defense-critical materials onto a U.S. military installation. The framework announced Tuesday is not a final lease or approval to begin operating a plant.
The proposed project would occupy about 200 acres and process dysprosium and terbium, according to the company’s term-sheet announcement. Those heavy rare earths are used in high-temperature permanent magnets for precision-guided munitions, electric motors, sonar, radar and other defense systems.
The agreement follows the Army’s June 25, 2026 selection of REalloys as the solicitation awardee for exclusive negotiations under its Strategic Capital Initiatives. Tuesday’s announcement concerns the next stage of those talks, not a new award made that day.
A long lease is proposed, but purchases are not guaranteed
The framework calls for an initial 50-year Enhanced Use Lease, with a single 25-year renewal option subject to conditions including Army consent. REalloys would finance, develop, build and operate the facility and ultimately decommission it. The United States would keep ownership of the land.
The Army would have a right of first offer to buy the facility’s output, subject to federal law and procurement rules. That provision does not obligate the Army to buy any product and is not a guaranteed customer contract.
REalloys would pay annual base rent at fair market value from the start of the lease, plus participation rent beginning with commercial operations. The parties have yet to agree on those rental terms in a definitive lease.
The strategic goal is to reduce dependence on overseas processing. Jeff Waksman, the Army’s principal deputy assistant secretary for installations, energy and environment, described rare-earth processing as a national security vulnerability and said China holds a “near 100% global monopoly on dysprosium and terbium,” according to the release.
Financing, reviews and an 18-month conditions window
A final lease remains subject to agreement on rent, Army acceptance of REalloys’ development plan, environmental reviews and permitting, and a satisfactory review of foreign ownership, control or influence. The company must also secure project financing and board approval, alongside applicable Army determinations and congressional notifications.
If those conditions are not met or waived within 18 months, either side may terminate the term sheet. Apart from certain customary provisions, the document is nonbinding, and REalloys warned there is no assurance a definitive lease will be signed or the facility developed, financed, built or operated as proposed.
In an interview Tuesday, REalloys’ chief executive said it would be a mistake to expect an alternative supply chain overnight. He also said there is no mine on the base. The planned Utah project is about processing and refining material, rather than extracting ore there.
Tooele already handles ammunition logistics and other defense work. An Army account published in April described the installation’s roughly 43,000 acres across two locations and its efforts to attract private-sector partnerships. That existing depot footprint should not be confused with the proposed 200-acre processing site.
For the defense supply chain, the term sheet offers a possible domestic location and a long-term operating framework. Its practical value will depend on the financing, approvals and construction still ahead, not on the signature alone.
JBizNews Desk | Utah
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