Samarium's 346x Price Gap Exposes the West's Missing Rare Earth Metallization Step

The 346x Samarium Gap: Why Western Magnet Plants Can't Get Metal

Samarium, a rare earth metal used in high-performance magnets, sells for as much as 346 times more in North America than in China. That extraordinary price gap is not a market anomaly — it is a preview of what American industry would pay if Beijing stopped exporting. Dysprosium costs five times more outside China, and yttrium more than 100 times more. Japan has already learned what happens when Chinese supply slows: its government is asking Washington for help before its yttrium runs out at year-end.

The problem is not a lack of mines. Billions of dollars are flowing into new mining and magnet manufacturing projects. The bottleneck is a less visible industrial step called metallization — converting rare earth oxides into metal, then melting and casting them into the alloy strip that feeds magnet production lines. China controls more than 90% of the world's 210,000 tonnes of capacity for that step, according to Canaccord Genuity, whose analysts call metallization "a major blind spot in western supply chain development." The strip casters that make the alloy now take up to two years to deliver, and Canaccord's channel checks found that buying them from China is "impossible under current export controls."

The numbers illustrate the mismatch. Canaccord expects magnet plant capacity outside China to more than triple to about 70,000 tonnes by 2030. Non-Chinese metal and alloy capacity, however, is expected to reach just 38,000 tonnes over the same period — roughly half of what those new magnet plants will need. Every Western magnet line that opens without its own metal supply will have to buy from China or compete with other Western plants for limited alternative supplies. ING has warned that China's grip may outlast this decade because the bottleneck is "industrial rather than geological."

REalloys (NASDAQ: ALOY) is positioning itself squarely in that gap. The company operates a facility in Euclid, Ohio, producing rare earth metals, alloys and magnet materials, and says it has the only operating heavy rare earth metallization capability in North America. It holds rights to approximately 80% of the Saskatchewan Research Council's expanded output, including roughly 525 tonnes of NdPr metal annually, alongside dysprosium and terbium products, and has a 15-year offtake agreement covering 15% of Phase 1 production from Critical Metals Corp.'s Tanbreez project in Greenland. Under a Defense Logistics Agency contract, it is designing a 300-tonne-per-year facility for samarium and gadolinium metal — two materials with no established commercial production in the United States. REalloys reported $122.4 million in cash at the end of June and says its Saskatchewan and metallization expansions are fully funded.

Metallization: The Blind Spot in the West's Rare Earth Buildout

Why Metallization Is the Real Chokepoint

Mining rare earths is only the first step. Before an oxide can become a magnet, it must be reduced to metal, alloyed with other materials, and cast into strip. This metallization stage is capital-intensive, technically demanding, and — crucially — concentrated in China. Canaccord Genuity's estimate that China controls over 90% of global metallization capacity explains why the West's magnet plant buildout is racing ahead of its metal supply. The strip casters needed for alloy production take up to two years to deliver, and Canaccord's channel checks found that buying them from China is "impossible under current export controls."

The arithmetic is stark. Non-Chinese magnet plant capacity is projected to reach about 70,000 tonnes by 2030, but non-Chinese metal and alloy capacity is expected to reach just 38,000 tonnes — roughly half. Every new magnet factory outside China will either depend on Chinese metal or compete for a limited pool of alternative supply. ING's warning that China's grip may outlast this decade because the bottleneck is "industrial rather than geological" captures the problem precisely: the constraint is not what is in the ground, but what can be processed outside China.

Where REalloys Fits — and What It Still Needs to Prove

REalloys is building capacity in exactly the part of the chain where shortages are projected to be most severe. Its Euclid, Ohio facility already produces rare earth metals, alloys and magnet materials, and the company claims the only operating heavy rare earth metallization capability in North America. It has secured non-Chinese feedstock: rights to approximately 80% of the Saskatchewan Research Council's expanded output (including roughly 525 tonnes of NdPr metal annually, plus dysprosium and terbium), and a 15-year offtake covering 15% of Phase 1 production from Critical Metals Corp.'s Tanbreez project in Greenland. A Defense Logistics Agency contract has it designing a 300-tonne-per-year samarium and gadolinium facility — two materials with no established US commercial production.

With $122.4 million in cash at the end of June, REalloys says its expansions are fully funded. But the company's position depends on execution: scaling metallization capacity, qualifying its alloys with magnet manufacturers, and competing against Chinese pricing that has historically undercut Western producers. The Pentagon's 10-year agreement with MP Materials — guaranteeing a minimum $110 per kilogram for NdPr and making up the difference when benchmark prices fall below that level — shows that Washington is willing to intervene to protect domestic production from Chinese price competition. Whether similar support extends to metallization-focused players like REalloys remains unclear.

The Demand Wave Behind the Shortage

Canaccord Genuity has raised its 2035 magnet demand forecast by 15%, now projecting the world could need 365,000 tonnes of rare earth magnets annually. The bank expects global NdFeB magnet demand to grow 7.3% per year, with EV sales more than doubling from 23.5 million this year to 52 million in 2035. Data centers, e-bikes, scooters and drones are adding new sources of demand. Drones account for only about 1% of forecast demand, but Ukraine and Russia alone were estimated to produce some 9 million military drones — and Canaccord acknowledges its estimates may prove conservative. Humanoid robots are another wild card: Canaccord models deliveries growing 45% annually to 2.5 million units by 2035, while Tesla is reportedly preparing an Optimus production line designed for 1 million robots a year.

Independent McKinsey research projects annual demand growth of approximately 8.8% for dysprosium and terbium, two heavy rare earths essential to high-performance magnets. Canaccord expects the NdPr market to run a roughly 7% deficit this year, with shortages continuing through 2028. New mines and refineries in Australia, Malawi, Brazil and Utah, alongside Lynas' expansions, could bring the market roughly into balance between 2029 and 2031. But the deficit is projected to return and widen to 10% by 2035, while dysprosium and terbium face a projected 12% shortfall. The International Energy Agency independently projects a 50% increase in demand for magnet rare earths outside China by 2035 and warns that non-Chinese metallization and magnet manufacturing capacity will remain severely inadequate even if all announced projects proceed.

What This Means for the Broader Critical Minerals Race

The rare earth squeeze is part of a wider competition for critical minerals. Copper and lithium producers are expanding operations and investing in supply chains essential to electrification, batteries and advanced manufacturing. BHP Group (NYSE: BHP) produced approximately 1.95 million tonnes of copper in fiscal 2026, with its copper division generating $18.2 billion in underlying EBITDA, up nearly 48% from the previous year. Teck Resources (NYSE: TECK) reported C$2.3 billion in adjusted EBITDA in its latest quarter, nearly double the previous year's level, with copper production up 11% to 115,700 tonnes. Freeport-McMoRan (NYSE: FCX) produced 832 million pounds of copper in the third quarter of 2026. Albemarle (NYSE: ALB) reported second-quarter 2026 revenue of $1.7 billion, up 31% year-over-year, with adjusted EBITDA climbing 155% to $858 million. These companies illustrate the scale of investment required to support an increasingly electrified global economy — and the fact that rare earths, unlike copper or lithium, face a processing bottleneck that mining investment alone cannot solve.

What the Metallization Shortage Means for Industry and Investors

The West's rare earth magnet buildout is racing ahead of the metal supply it needs, and the bottleneck is metallization — a step China controls over 90% of.

For manufacturers, investors and policymakers, the implications are concrete:

• Magnet manufacturers: Secure metal and alloy supply before committing to new production lines. Canaccord projects non-Chinese metal capacity at 38,000 tonnes by 2030 versus 70,000 tonnes of magnet plant demand — a structural shortfall that will not resolve through mining investment alone.
• Investors: Watch REalloys' execution on its Saskatchewan feedstock integration and the Defense Logistics Agency samarium/gadolinium facility. The company's $122.4 million cash position funds current plans, but qualification with magnet manufacturers and competitive pricing against Chinese metal remain key milestones.
• Policymakers: The Pentagon's $110/kg NdPr floor price for MP Materials is a template for protecting domestic production. Similar support for metallization capacity — the step Canaccord calls a "major blind spot" — may be needed to close the gap.
• Metrics to watch: Canaccord's NdPr deficit forecast (roughly 7% this year, continuing through 2028), the projected 12% dysprosium/terbium shortfall, and the timeline for non-Chinese metal capacity to reach 38,000 tonnes by 2030.