Tuesday, July 07, 2026

Ugandan Farmers Sue to Block $5 Billion East Africa Oil Pipeline

A group of Ugandan farmers on Tuesday filed a case in the UK High Court against the developer of a $5-billion oil pipeline in East Africa, seeking to stop the nearly completed project on environmental grounds.

The $5 billion East African Crude Oil Pipeline (EACOP), which will transport crude from Uganda’s Albertine Graben to Tanzania’s Tanga port, is nearly completed, after years of delays and controversies surrounding the project. The development of EACOP is being led by French supermajor TotalEnergies.

However, EACOP has drawn environmental scrutiny for years for its potential impact on ecosystems and communities along the route. Supporters argue that the project could be transformative for East Africa, creating jobs, boosting infrastructure investment, and strengthening regional energy security.

Opponents, including the Ugandan farmers who filed the lawsuit against the UK-registered EACOP Ltd, contend that the pipeline, the oil production, and the route would harm water resources in the area, as well as wildlife and biodiversity.

The 1,443-kilometer pipeline will enable Uganda to export its oil for the first time. Production from the Albertine Rift Basin, where TotalEnergies and China’s CNOOC are developing the Tilenga and Kingfisher oilfields, is expected to peak at around 200,000 barrels per day.

The oil pipeline is expected to bring crude from the Lake Albert project in Uganda to the international oil market. It is designed to transport 216,000 barrels of crude oil per day, with a ramp-up of up to 246,000 bpd, Uganda says.

The pipeline construction could be completed as soon as this month, with first shipments late this year or in early 2027.

The plaintiffs hope a successful lawsuit could stop the pipeline from becoming operational.

“The case seeks remedies that could go to the heart of the project’s commercial viability, including an injunction to stop oil being transported through the pipeline, as well as compensation and other legal relief under Ugandan law,” the Ugandan farmers said in a petition through law firm Leigh Day cited by Bloomberg.

By Charles Kennedy for Oilprice.com

Super El Niño Could Push Colombia Into an Energy Crisis

  • Colombia is becoming increasingly dependent on costly LNG imports as domestic natural gas production and reserves continue to decline.

  • A potential Super El Niño could reduce hydroelectric generation, increasing demand for gas-fired power and pushing energy prices even higher.

  • Rising gas costs, inflation, fiscal pressures, and weakening domestic production are creating significant economic and energy security risks.

Scientists predict 2026 will bring a devastating Super El Niño weather event, with rising temperatures and economically damaging droughts expected. There are fears the climate pattern will hit Colombia especially hard, triggering severe droughts that lower water levels and sharply reduce hydroelectric power generation. This will significantly pressure Colombia’s thermal power plants, already constrained by a natural gas shortage, while straining the electricity grid. As a result, costly natural gas imports will rise, adding pressure to Colombia’s fragile, fiscally strained economy.

Colombia first began importing natural gas in December 2016. Since then, the volume of liquified natural gas (LNG) shipments soared higher, despite rising prices. For 2025, it is estimated that around 18% of all natural gas consumed in Colombia that year was imported. Already for 2026, that number is ballooning out at a worrying rate. While earlier calculations predicted that around a quarter of Colombia’s natural gas would come from overseas, that amount has blown out to over 32% and is expected to climb further.

As a result, natural gas prices across Colombia are soaring, with LNG imports significantly more expensive than domestically produced dry gas. Between 2022 and 2024, prices surged by 36%, and despite attempts to mitigate the risks associated with rising natural gas imports, they continue to rise. Industry analysts estimate that natural gas prices in Colombia will rise by as much as 25% during 2026, further impacting businesses and households, with a spiraling cost-of-living crisis emerging.

This, in turn, will fuel further jumps in the inflation rate, which is already at a multiyear high. These developments are weighing heavily on an already fragile economy, which is fiscally vulnerable with the budget deficit at near historic highs of 6.4% of gross domestic product (GDP) at the end of 2025. It is anticipated it will blow out to 6.6% during 2026, which will make Colombia’s fiscal deficit the world’s third-largest.

Costly liquefied natural gas (LNG) imports are driving inflation higher, pushing up business and household costs because it is an essential commercial and domestic fuel. According to the government statistics agency DANE, Colombia’s monthly inflation rate hit 0.47% for May 2026, which translates to 5.84% on an annual basis. That marks the highest rate since 2024, when inflation was still easing after reaching a record 12.36% in 2023, driven by excess pandemic stimulus and a global price surge linked to COVID-19 lockdowns.

Colombia’s growing dependence on natural gas imports arose because of a marked decline in domestic production along with dwindling reserves of the essential fossil fuel. During April 2026, Colombia pumped 694 million cubic feet of natural gas per day, which was nearly 1% lower month over month and a worrying 15% less than a year earlier. That number is 36% lower than a decade earlier, underscoring the steep production decline of this economically vital fossil fuel from a period when Colombia was self-sufficient.

The decline is largely due to a lack of new discoveries and a substantial drop in output from Colombia’s Chuchupa and Ballena fields in the offshore La Guajira Basin. Production from the Chuchupa peaked in 2010, with over 90% of all recoverable hydrocarbons now extracted. The field will reach its economic limit in 2027, now accounting for a mere 1% of Colombia’s total natural gas output. Ballena’s output peaked in 2014, with production expected to continue until 2039, when analysts forecast that economically recoverable natural gas will be depleted.

These factors are responsible for declining production and a widening supply gap that will worsen if El Niño arrives in Colombia during the second half of 2026. Recent news that Colombia’s proven reserves of the essential fossil fuel have fallen again heightens the risks to its natural gas-dependent economy. According to Colombia’s petroleum regulator, the National Hydrocarbon Agency (ANH), proven natural gas reserves at the end of 2025 fell 17% year over year to 1.717 trillion cubic feet.

Source: National Hydrocarbon Agency (ANH).

This represents an 18-year low, with growing fears that Colombia’s proven natural gas reserves will continue to decline.

President Gustavo Petro’s short-sighted energy policies, which focus on significantly reducing Colombia’s dependence on fossil fuels, are a disaster for the country’s oil patch. Petro is Colombia’s first-ever left-wing president who, upon taking office on August 7, 2026, implemented a series of policies aimed at maximizing the benefits delivered by oil extraction while reducing dependence on fossil fuels. This included banning new exploration and production contracts, weighing heavily on drilling activity and foreign energy investment.

That is a key reason for the lack of new oil discoveries in Colombia, where there has not been a world-class discovery since the 1990s. This continues to weigh on the country’s hydrocarbon reserves. Petro’s decision to frequently hike taxes for energy companies and attempt to ban hydraulic fracturing, known as fracking, further contributed to the growing malaise in Colombia’s oil patch. Those policies, particularly regular tax hikes, saw many drillers operating in Colombia sharply slash spending in the country.

Some energy companies, like Exxon, chose to exit the country, seeing greater opportunity, security, and returns from any investment in other nearby countries, such as Guyana. Those developments are heavily impacting Colombia’s hydrocarbon production and reserves. The sharp impact of Petro’s regulatory and tax reforms on Colombia’s oil industry is magnified by rising lawlessness and violence in remote regions where many energy operations are located. 

Since Petro took office, illegal armed groups have expanded their ranks, using his “total peace” policy as an opportunity to extend their territory, number of recruits and operations. Colombia’s security agencies estimate there are 22,000 members of various illegal armed structures across the country have 22,000 members. This is significantly greater than the 15,000 members reported for 2022 when Petro assumed office. This, along with rising coca cultivation and cocaine production, is responsible for a sharp uptick in violence in many rural regions.

Colombia’s growing dependence on ever-larger volumes of costly imported natural gas presents a considerable risk to a fragile economy, already buffeted by structural issues and serious headwinds. This will not only drive inflation higher, forcing Colombia’s central bank to keep interest rates higher for longer, but it will also negatively affect industry and agriculture, where natural gas is an important low-cost source of energy. There is also the very real risk of a sharp drop in electricity supply, further impacting the economy.

By Matthew Smith for Oilprice.com

Six Key Issues to Watch at NATO’s Ankara Summit


  • Defense spending and the path toward NATO's 5% GDP target are expected to be the summit's central focus.

  • Ukraine remains a top priority, with new financial commitments, military cooperation, and a planned Trump-Zelenskyy meeting.

  • The alliance will also address the aftermath of the Iran conflict, U.S. troop levels in Europe, and NATO's future strategic direction.

NATO leaders are meeting in the Turkish capital, Ankara, for the alliance’s annual summit on July 7-8 in the shadow of the Iran war and American complaints that not all European allies are pulling their weight when it comes to defense spending.

The expectation is that US President Donald Trump will have harsh comments for several of his European counterparts as they meet for a dinner on the first day and then an expected three-hour session of the North Atlantic Council on the second and final day.

The following are six things to watch for during the two-day meeting.

Defense Spending

Make no mistake: This summit will be dominated by defense spending.

At last year’s gathering in The Hague, the alliance ceremoniously agreed that all 32 allies would spend 5 percent of GDP on defense by 2035, with 3.5 percent of that being so-called “hard defense spending,” such as purchasing arms and other military equipment. The remaining 1.5 percent could then be dedicated to investment that helps bolster military capabilities, such as infrastructure.

In Ankara, it will be all about demonstrating how to get there. Or as the draft declaration of the summit put it: showing a “credible path” toward the target.

Some NATO officials who spoke to RFE/RL fear many countries will defer major defense investments over the next few years because of strained public finances, only to splurge on expensive military equipment in 2034-35 in what is known within the alliance as the "hockey stick approach, in which years of relatively flat spending are followed by a sharp final spike to meet the target.

The Trump Factor

It is on defense spending that Trump likely will come out swinging.

He has long been skeptical of NATO and days before the Ankara summit he again questioned the alliance on social media by writing that it is “ridiculous for the U.S.A. to continue along this one sided path when the relationship is not reciprocal.”

He also included a graph showing that Washington spends a lot more on its military than any single European ally.

It is here that the NATO Secretary General Mark Rutte once again will try his best diplomatic efforts and point out that Europeans and Canadians actually are stepping up.

Speaking just ahead of the summit, he said the other 31 allies “already are investing around 4 percent of their GDP in defense and security,” often by buying American-made equipment.

This trend, Rutte noted, would mean that the other 31 members were now on “a trajectory to equalize their defense spending with the United States.”

While several NATO officials RFE/RL spoke to admit that -- although they fear the US President will be harsh at the summit -- many still think the meeting will run relatively smoothly with minimal drama.

Oana Lungescu, a former NATO spokesperson who is now a fellow at the Royal United Services Institute for Defense and Security Studies (RUSI), said there is optimism that the positive mood from the recent G7 summit in France will carry over to Ankara.

"Diplomats hope that the 'spirit of Evian,' the constructive atmosphere of the recent G7 talks in France, will extend to Ankara -- including on the need to support Ukraine as momentum on the battlefield seems to be shifting," she said.

Lungescu said officials also believe the personal rapport between Trump, Rutte, and Erdogan could help keep the summit on track. While Trump may criticize some European leaders over the Iran war or defense spending, she said, "he will not want the summit to fail and Erdogan to lose face on home turf."

US Troops In Europe And Industrial Ambitions

In parallel to this debate there is also the issue of US boots on the ground in Europe.

Today’s figure of roughly 80,000 troops might be reduced, as there is talk of Washington redeploying both strategic assets and manpower elsewhere, notably to Asia.

With US Defense Secretary Pete Hegseth saying in May that the US will undertake a six-month review of its force posture in Europe, few NATO officials believe that this will be a major topic at the meeting even though potential bilateral negotiations and lobbying efforts on the sidelines by European nations hosting US bases might very well occur.

In the meantime, NATO's top military commander in Europe, Alexus Grynkewich, said European allies have largely stepped up to fill capability and reinforcement gaps left by recent US troop and asset reductions in Europe.

The draft Ankara declaration, which all allies will endorse, explicitly mentions NATO’s mutual defense clause, Article 5, even though there are fears in some European capitals about whether the alliance would uphold it if Russia tested NATO in the coming years.

Anther thing that alliance officials also hope will trigger defense spending is the NATO defense industrial forum, which will take place on July 7 hours before the summit starts.

This is where big defense actors and politicians will announce plenty of multilateral cooperation deals on defense, including various transatlantic joint ventures.

With Canada taking the lead, several countries will also announce a “global defense bank,” which will make it easier to lend money to small- and medium-sized defense enterprises.

One can also expect Ukrainian companies to be very active in striking deals, as Kyiv is keen to secure some sort of licensing to build Patriot missiles (or their equivalent) in Ukraine

But other countries will perhaps be even more keen to tap into Ukraine’s technological know-how, with one senior NATO official telling RFE/RL that Kyiv could soon produce produce its own domestic version of a Patriot Advanced Capability-2 (PAC-2) interceptor.

“Ukrainians are telling us they can develop an interceptor that is basically an equivalent to a PAC-2 in less than a year,” the official said “And that they can produce them in big numbers. If they're able to do that, we applaud it.”

Nonetheless, although the spending splurge will continue, the question will remain whether Europeans are spending the money wisely.

Olga Oliker, European security director for the International Crisis Group, cautioned that "spending does not translate into capability by itself." She said European governments and manufacturers are still grappling with how to balance investment in "fast, cheap and adaptable weapons" with the urgent need to produce more advanced air defenses.

Ukraine: The Resilient Underdog

While Ukrainian President Volodymyr Zelenskyy will be busy both at the industrial forum and the leaders’ dinner, the most anticipated meeting will be his bilateral meeting with Trump on the sidelines of the summit.

With Russia again killing dozens of people in Kyiv after another missile attack just before the summit, there is hope that some sort of US-led peace talks, which a senior NATO official recently described as “comatose,” can be revived.

The mood surrounding Ukraine within NATO has otherwise changed considerably.

Several officials have been impressed by Kyiv’s ability to strike deep inside Russia.

“Ukraine is in a better place on the battlefield compared to some months ago,” said one European official, noting that the United States is much more supportive of Ukraine now.

“The US loves an underdog as long as the underdog has a chance of winning,” he added.

Unlike last year, there is no debate this time about whether Zelenskyy will be at the summit (though not at the main session as this is for NATO members only).

There is also a pledge in the summit declaration to provide the country with 70 billion euros ($80 billion) for 2026 and the equivalent for next year, even though some discussion ahead of the summit suggested that the declaration would only mention a financial pledge for Kyiv for 2026.

The US will not contribute to this, and 30 billion of the 70 billion euros comes from a 90 billion euro EU loan to Ukraine agreed earlier this year.

In other words, there is not a lot of fresh money.

Speaking to journalists ahead of the summit, Ukraine's ambassador to NATO, Alyona Hetmanchuk, said a financial commitment in the summit declaration could help hold allies to this year's funding pledges while generating additional support for Ukraine.

"We hope that if there is a financial obligation spelled out in the declaration, it will help. Firstly, to oblige countries to fulfill the financial promises made this year. And secondly, generate additional funds," she said.

In another small victory for Ukraine and its supporters, Russia is also mentioned in the declaration, with Moscow described as “a long- term threat to Euro-Atlantic security.”

This is the same language used in the declaration adopted at last year's summit in The Hague, but this time NATO officials say there were no objections and no attempts to water down the wording.

Iran Issues

The Iran war has created tensions within the alliance as well, with President Trump bemoaning the lack of “loyalty” among some allies after they limited or initially stopped Washington from using bases in their countries for US attacks on Iran.

US Ambassador to NATO Matthew Whitaker told reporters earlier this month that "there is no doubt that the president expressed disappointment," but said the alliance had since moved on, adding: "those days are past us, thankfully."

The NATO declaration will call on Tehran to fully respect freedom of navigation in the Strait of Hormuz and there will also be a number of representatives from various Persian Gulf states present in Ankara.

No distinct NATO role in the Gulf is envisaged, however.

Instead, a coalition of the willing led by France and the United Kingdom, with other countries expected to join, is preparing to contribute assets such as minesweepers and diving teams.

However, the coalition’s rules of engagement are still unclear, according to one NATO official, who pointed out that “mixed signals” were coming out of Iran about whether other countries' vessels would be allowed to operate in the Strait of Hormuz.

Another challenge is that few European naval vessels have adequate defenses against drone attacks, making any wider coalition in the strait very vulnerable if they were to be deployed any time soon.

When And Where For The Next Summit?

The final issue to resolve at Ankara is where the next summit will be held and when it will take place.

The Hague declaration stated that Albania would host the event after Turkey, but no location or date is mentioned in the draft Ankara declaration -- at least not yet.

This is because some at NATO have expressed doubt that a country spending just under 2 percent of GDP on defense should be hosting a summit.

Albania is pushing to get a defense budget approved for this year that will take its spending up to 2.6 percent, but it is possible that a final decision on whether Tirana will host the next summit won't be taken until later this year.

Separately, there have also been discussions about whether NATO should go back to having summits every two years, which was the case before Russia’s full-scale invasion of Ukraine in 2022.

While some argue that NATO should continue to meet annually as long as there is a war in Europe, others believe that the lack of concrete political deliverables on an annual basis should allow the alliance to meet at the highest level less frequently.

By RFE/RL

Oil Market Swings From Glut Fears to Hormuz Toll Concerns


  • Rising tanker traffic has revived oversupply fears, but much of the increased crude flow is replenishing depleted global storage rather than reflecting a sustained surge in production.

  • Oil market uncertainty remains high, as analysts debate whether lower prices will spur stronger demand while importers prepare for the possibility that Iran and Oman could impose future transit tolls through the Strait of Hormuz.

  • Producers and consumers are racing to normalize the market, with OPEC increasing output, the U.S. maintaining record production, and importing nations rebuilding strategic inventories.

Despite a lull in peace talks progress between Iran and the United States, analysts have once again started to talk about oversupply as tankers leave the Persian Gulf in greater numbers than the past three months. Importing nations are even being warned of a “wave” of crude coming their way. Meanwhile, some are preparing for a future where Hormuz passage tolls are part of oil price formation.

The latest to warn about a glut of crude oil was the Wall Street Journal, following reports from other major media outlets citing analysts as expecting the global oil market to swing from a sizable deficit to excess supply. OPEC’s latest production figures support the argument that supply is improving, although a glut prediction may be premature. Still, the group’s combined output rose by 3.3 million barrels daily last month from May, to hit 19.43 million barrels daily. That, however, is still far from pre-war production levels.

Meanwhile, the United States broke another oil output record, pumping close to 14 million barrels daily, and the UAE was reported to be exporting all-time high volumes as it empties its storage tanks, filled to the brim during the war when Hormuz was closed. However, there is an important detail in the picture, and that detail is oil in storage.

The Wall Street Journal reported earlier this month that global oil storage refilling was a big part of negotiations. Indeed, the publication cited U.S. Vice President J.D. Vance as saying that the two sides had inked a preliminary agreement to let countries “refill some stocks and then to see where the hand is.” Indeed, the less hasty analysts out there have noted that the recovering tanker traffic via the Strait of Hormuz can hardly be seen as a driver of an oil glut, given how many countries have had to dip into their oil storage, and dip deep, at that. This now has to be replenished.

“The surge in oil supply is about to collide with a market that, at least for now, simply does not need it,” JP Morgan’s Natasha Kaneva said, as quoted by the Wall Street Journal, echoing remarks made by other analysts who believe the world needs less oil than it is currently getting. This is an interesting position given that just until about two weeks ago, analysts were pretty unanimous in their take on the war, recognizing demand destruction by high prices and expecting a deficit possibly extending into 2027 if the war dragged on long enough.

ING analysts, unlike JP Morgan’s Kaneva, expect improved buying of crude ahead, driven by lower prices in recognition of the fundamental patterns governing oil markets. Cheap oil drives higher demand while expensive oil drives lower demand. Noting that despite recovering tanker flows out of the Persian Gulf, the U.S. was still releasing crude from the strategic petroleum reserve, Warren Patterson and Ewa Manthey wrote on Friday that “with the flat price falling and the forward curve moving into contango, we could start to see more buying in the market.”

The price at which this buying will be taking place may well include a Hormuz pass toll, to be paid to both Iran and Oman, Bloomberg reported earlier this month, citing some European countries that were preparing for just that eventuality. According to the report, the view that Iran and Oman will be asking toll payments for tankers was also shared by some officials from the Gulf Arab states, but only privately.

The official position of the Gulf states and the United States is that maritime laws would not allow this, and that if Iran or both Iran and Oman go ahead with the tolls, this would set a precedent for other countries with critical waterways in their maritime territory. Oil buyers from the European Union, however, are particularly worried about the possibility of tolls for Hormuz, suggesting that even after such a deep drop in oil prices from peak wartime levels, oil is not yet cheap enough for some importers, not to mention the next price jump whenever it may occur, as happens in cyclical industries.

For now, however, everyone appears to be focused on keeping prices as low as possible. OPEC is boosting production to make up for three months or more of lost export revenues, the United States is trying to lower prices at the pump even further, and importing nations are refilling their storage. After fears about recession and bankrupt airlines, some relief has been provided to the global economy. It is uncertain whether this relief is permanent, and it would be wise to bear this in mind.”

“Coming off the U.S. long weekend, traders are sitting tight and waiting to see whether U.S.-Iran relations will be cordial or volatile this week,” KCM Trade chief analyst Tim Waterer told Reuters earlier today. That is some sound advice, even coming on the heels of news that OPEC agreed to boost production further in August.

By Irina Slav for Oilprice.com

Big Oil's Windfall Earnings Threaten to Reignite Trump's Price-Gouging Push

  • Big Oil heads for its strongest quarter since 2022, with Chevron and Exxon expected to post surging profits after the Iran conflict and Strait of Hormuz disruption sent oil and gas prices sharply higher.

  • Trump is escalating pressure on oil companies, accusing them of price gouging and demanding gasoline prices fall toward $2.50 per gallon.

  • The clash between the White House and Big Oil is set to intensify, as strong earnings contrast with still-elevated fuel prices and uncertainty over Iran.

Chevron and Exxon are expected to report their best quarter since 2022 this month, as the war that the United States and Israel started against Iran on February 28 drove much tighter oil and gas supply. This could be a problem for President Trump who has already slammed Big Oil for keeping prices at the pump too high.

The two biggest American oil companies are reporting second-quarter results at the end of this month and, according to Reuters, will book the best quarter since 2022, when Western sanctions on Russia following its incursion into Ukraine pushed international benchmarks to well over $100 per barrel. This year, the U.S. and Israeli strikes against Iran prompted the latter to close the Strait of Hormuz, which in turn caused oil and gas prices to skyrocket—although they never quite reached 2022 levels.

As usual, when crude oil prices rise, so do the prices of the end products made from crude, boosting refiners’ bottom lines. In the latest supply crisis, U.S. crude played a central role in offsetting some of the lost supply from the Middle East, with U.S. producers selling abroad record volumes of crude and refined products, turning the country into the world’s largest oil and fuels exporter. This, however, has come at a price for Americans.

Retail fuel prices flew higher in the wake of those strikes by the U.S. and Israel that started the war with Iran, and although they never really hit the highs from 2022 when a gallon of regular gasoline topped $5, they were high enough to anger the U.S. president.

“The big Oil Companies are not dropping their price at the pump commensurate with the sharply lower prices they are paying for Oil. Those prices are dropping ‌like a rock! In other words, customers are being ‘gouged’,” Trump wrote on TruthSocial at the end of last month. “I have instructed the DOJ to immediately start looking into this. Gasoline prices better start going down a lot faster than what I’m seeing!”

The news came as a surprise to many, seeing as the U.S. president has had a cordial relationship with Big Oil, which was a generous donor to his second presidential campaign. Trump also made the expansion of the U.S. oil and gas industry a priority for his second presidential administration, vowing to establish U.S. energy dominance over the world.

In that, he has been quite successful although it is arguable whether it was the federal government’s help that turned the U.S. into the world’s biggest oil and gas exporter or years of efforts by the industry itself to become more resilient to various challenges. The industry responded to Trump’s accusations of price-gouging with a statement along the lines of refiners and fuel marketers not having universal price-setting power and rather following crude price trends on international markets.

President Trump then acknowledged prices have moderated, as the national average slid below $4 per gallon, but insisted gasoline should sell for $2.50 per gallon, and if it was not, then that was the fault of Chevron, Exxon, Shell, and BP. “Our industry shares the goal of delivering relief at the pump and restoring stability to global energy markets,” a spokeswoman for the American Petroleum Institute said in response, noting that fuel prices do not “move in lockstep” with crude oil prices.

“Gasoline prices don’t move in lockstep with crude oil, especially during a major global disruption affecting supply, refining and inventories,” Bethany Williams said at the time. Meanwhile, despite some progress being made by the U.S. and Iran in peace negotiations, a final agreement remains elusive, with tanker traffic recovery in the Strait of Hormuz ongoing but also uncertain. This means that President Trump’s price target, as it were, will also remain elusive for the time being. As for Big Oil’s profits, they may spark stronger anger and more action, for which the industry is already preparing by trying to calm the White House down through lobbying.

By Irina Slav for Oilprice.com

 

The U.S. Army Just Took a Historic Step to Break China's Rare Earth Dominance


The U.S. Army has placed REalloys at the center of America’s drive to rebuild its heavy rare earth supply chain, selecting the company to build and operate the first-ever commercial critical mineral processing operation on a U.S. military installation.

REalloys (NASDAQ: ALOY) plans to build a heavy rare earth processing complex at the Tooele Army Depot in Utah capable of refining dysprosium and terbium, two of the most strategically important rare earth elements used in high-temperature permanent magnets for defense systems.

For the first time, commercial critical mineral processing is being integrated directly into America’s national security infrastructure. The Tooele platform is expected to support the U.S. Army, the Defense Logistics Agency, the Department of Energy and NASA, placing REalloys at the center of one of the country’s most strategically important industrial buildouts.

Commercial development is targeted to begin in 2027, with initial operating capability expected no later than 2028. That urgent timeframe is scheduled to coincide with the January 1, 2027, federal procurement ban on Chinese rare earth materials used in American defense systems. 

REalloys expects to finance, build, and operate the facilities under an Enhanced Use Lease structure, creating a commercial processing platform on federal military property while keeping ownership, financing, and operations in private hands.

The Army award moves REalloys upstream. Earlier this year, the Defense Logistics Agency backed the company’s metallization technology through a contract to expand domestic samarium and gadolinium metal production. The Tooele project reaches further into the supply chain, adding commercial heavy rare earth processing to a platform that already includes metals and alloys.

Washington is compressing years of supply chain development into a matter of months. An integrated domestic rare earth industry is taking shape in real time.

Why The U.S. Army Chose REalloys

Much of REalloys’ heavy rare earth platform was already in place when the Army selected the company for Tooele.

Over the past two years, REalloys (NASDAQ: ALOY) has assembled feedstock agreements, processing rights, metallization technology, and downstream manufacturing capacity designed for what is expected to become the largest heavy rare earth metallization facility outside China through its partnership with the Saskatchewan Research Council.

The company committed approximately $20.6 million to upgrades at the Saskatchewan Research Council’s rare earth processing facility, securing exclusive supply rights for 80% of the facility’s expanded output, including NdPr metal and dysprosium and terbium oxides.

SRC’s initial commercial production remains targeted for early 2027, with REalloys is building a dedicated heavy rare earth metallization facility for dysprosium and terbium metals. Engineering is underway, major equipment procurement has begun, and qualification materials are expected as early as the fourth quarter of 2026

That gives REalloys something few companies in the Western rare earth sector can claim: access to separated heavy rare earth output, a path to metallization, and a U.S. manufacturing base in Euclid, Ohio.

The company has also secured long-term feedstock, including a definitive long-term offtake agreement for 15% of Phase 1 production from Critical Metals’ Tanbreez project in Greenland, a strategic alliance and offtake commitment tied to the Sheep Creek rare earth deposit in Montana, and a proposed supply framework with Ramaco Resources for coal-hosted rare earth material from the Brook Mine platform in Wyoming.

And it’s pursuing additional supply arrangements with domestic and allied sources, including coal-hosted rare earth material from Ramaco’s Brook Mine platform in Wyoming.

The result is a company already moving across multiple stages of the chain that the Army is trying to rebuild: feedstock, processing, metallization, alloys, and eventually permanent magnets.

Washington Is Building An Industry

The Tooele announcement is about far more than a single processing facility.

Over the past year, Washington has introduced procurement restrictions, awarded defense contracts, backed commercial processing, accelerated qualification programs, and now opened the gates of a U.S. military installation to commercial rare earth production. 

Those decisions are reshaping an industry that scarcely existed outside China only a few years ago.

Building a domestic rare earth industry requires far more than opening new mines. 

Ore must first be mined and concentrated before it can be chemically separated into individual rare earth elements. Those materials are then converted into high-purity metals, alloyed into specialized magnetic materials and ultimately manufactured into the permanent magnets that power everything from precision-guided weapons and fighter aircraft to electric motors, radar systems and naval platforms. 

For decades, China built nearly every step of that industrial chain while much of the West allowed those capabilities to disappear.

The effort extends well beyond the rare earth sector itself. 

Earlier this month, President Trump invoked the Defense Production Act to address production bottlenecks across the defense industrial base, citing limited manufacturing capacity, fragile supply chains and long-lead dependencies. 

This week, President Trump met with the heads of Lockheed Martin, RTX, Boeing, Northrop Grumman, General Dynamics and L3Harris as the administration pressed the defense industry to accelerate production and replenish U.S. weapons stockpiles. 

Three of those companies show exactly why the timeline matters.

Lockheed Martin (NYSE: LMT) builds the F-35, and that jet alone carries more than 900 pounds of rare earth materials, including roughly 50 pounds of samarium-cobalt magnets built to hold their strength at extreme heat. All of it falls under the same January 1, 2027, deadline REalloys is racing to meet at Tooele.

RTX (NYSE: RTX) carries similar exposure through its Patriot missile system and its radar and electronic warfare lines, both of which run on high-purity dysprosium and terbium. Those inputs still trace back through Chinese processing chains, the same chokepoint REalloys’ Tooele complex is meant to break.

Northrop Grumman (NYSE: NOC) has the same problem on its B-21 Raider bomber and its radar and space-surveillance work, including the Deep Space Advanced Radar Capability program. Like Lockheed Martin and RTX, it has to prove its magnet supply chain is free of Chinese material by the 2027 deadline or risk losing eligibility for covered contracts.

Those efforts coincide with the January 1, 2027, procurement restrictions, which require covered defense systems to source compliant rare earth materials and permanent magnets.

Meeting those requirements involves far more than finding new suppliers. Rare earth oxides, metals, alloys, and permanent magnets must all be qualified before they can enter defense production, a process that can take months or even years depending on the application.

That process is already underway. 

REalloys (NASDAQ: ALOY) is expected to began qualification efforts for defense-grade heavy rare earth materials by the end of 2026, allowing prospective customers to validate North American-produced dysprosium, terbium and other rare earth materials ahead of the January 1, 2027, procurement deadline.

The result is one of the most coordinated industrial reconstruction efforts the United States has undertaken in decades, and REalloys is at the heart of it. 

By. Michael Kern