The circular economy demands waste utilization for the production of high-value products, and this requires the development of novel processing routes. In this study, rare earth (La and Ce) oxides were completely (>99%) recovered from polishing waste by a combined novel reductive acid leaching and alkali treatment process. About 70% of rare earths were dissolved during the first leaching step. The undissolved rare earth compounds are converted to oxides/hydroxides by alkali treatment and dissolved in the acid solution – the 2nd leaching step – for the complete recovery of rare earths. The recovered rare earth oxides were used for producing in-situ high-value Al-La-Ce alloys with fused salt electrolysis. Mechanical properties of our Al-La-Ce alloys are similar to the known high temperature Al-Ce alloys. This development of new alloys by our novel process helps in utilization of both overproduced primary La and Ce oxides as well as La and Ce recovered from polishing waste.