AREC’s ReElement unit secures ERI feedstock deal, inching its rare-earth recycling strategy forward

What happened

American Resources’ minority-held ReElement Technologies signed a commercial processing agreement with Electronic Recyclers International (ERI) to source and pre-process end-of-life magnet material from ERI’s extensive U.S. collection network. The deal establishes a framework for domestic production of refined rare earth oxides from recycled magnet waste, directly aligned with ReElement’s strategy to supply magnet and battery markets and coming on the heels of its announced $1.4 billion partnership with the U.S. Department of War (per the release). For AREC, which has suspended coal operations and is pivoting its value proposition toward ReElements and Electrified Materials, this agreement is an incremental proof point that ReElements can secure real-world feedstock and offtake pathways. However, the company has not disclosed volumes, pricing, or capital commitments, and AREC remains financially fragile with negative free cash flow, a stockholders’ deficit, and heavy reliance on restricted investments. Overall, the announcement modestly de-risks ReElements’ commercialization narrative but does not yet resolve the broader execution, structure, and financing challenges highlighted in the DeepValue master report.

Implication

For investors, the ERI agreement strengthens the argument that ReElements can secure a scalable, diversified stream of recycled magnet feedstock, which is a critical prerequisite for growing rare-earth oxide output and revenues. If successfully executed alongside the recently announced government partnership, this could accelerate ReElements’ revenue ramp and, over time, provide a more tangible basis for valuing AREC’s minority stake and consolidated VIE interests. That said, without detail on contract duration, volumes, pricing mechanisms, or required capex, near-term financial impact is uncertain and may be modest relative to AREC’s ongoing losses and thin liquidity. The complex post-distribution VIE structure, thin trading in AREC shares, and concentration of assets in restricted investments mean any upside from ReElements remains entangled with governance and financing risk. Practically, investors should treat this news as a reason to keep AREC on a watchlist rather than to chase the stock—monitor subsequent quarters for measurable ReElements revenue growth, margin progression, and clearer disclosure of how much economic value actually accrues to AREC shareholders before sizing positions meaningfully.

Thesis delta

This announcement modestly improves the probability that ReElements can secure sustainable feedstock and move from pilot-scale operations toward repeatable commercial revenue, addressing a core execution risk highlighted in the prior WAIT/NEUTRAL thesis. However, the absence of disclosed economic terms and the continued presence of significant balance-sheet, liquidity, and structural risks at AREC mean our overall stance remains WAIT/NEUTRAL rather than upgrading to BUY. In effect, we see a slightly more constructive tilt to the ReElements option value within an unchanged, high-risk profile for the consolidated AREC story.