Australia’s Lynas lands $120 million contract from Pentagon for US rare earth project

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A small toy figure and a mineral imitation appear in front of the Lynas Rare Earths logo in this November 19, 2021 illustration. REUTERS/Dado Ruvic/Illustration

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June 14 (Reuters) – Australian company Lynas Rare Earths (LYC.AX) has signed a $120 million follow-up contract with the US Department of Defense to build a commercial heavy rare earth separation facility in Texas, the company said on Tuesday with.

Lynas is the world’s only rare earths processor outside of China, and the agreement with its US subsidiary builds on Phase 1 financing for a plant announced in July 2020.

The project, for which the Pentagon has provided initial funding, is scheduled to be built in an industrial area on Texas’ Gulf Coast and to be operational in fiscal 2025, the company said.

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Lynas intends to combine the heavy rare earth separation facility with a light rare earth separation facility that is funded in part by the US Department of Defense’s Defense Production Act Office.

The plant would be the first outside of China capable of separating heavy rare earths, Chief Executive Amanda Lacaze told Reuters in an interview.

“And that’s why this is such an important step,” she said after Tuesday’s news.

Lynas mines rare earths in Western Australia and ships the material to Malaysia in Southeast Asia where rare earth oxides are produced.

However, the company’s goal of increasing production by 50% by 2025 would not be enough to meet rising demand, Lacaze said.

“The rapid growth of the market, particularly over the past 12 months, tells us that we need to accelerate this plan,” she said of the goal the company has set for 2019.

With supplies disrupted by the COVID-19 pandemic, interest has grown from Western nations, Japan, the European Union and others as they recognize the risk of relying on China as the sole source of supply.

“The issue here isn’t whether they’re Chinese or non-Chinese…it’s just that having a single supply chain is problematic, especially in an area where you have rapid growth and mission-critical material. ‘ Lazaze said.

“We are certainly very engaged with governments concerned about supply chain security and we will continue to do so.”

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Reporting by Riya Sharma in Bengaluru; Adaptation by Richard Pullin and Clarence Fernandez

Our standards: The Thomson Reuters Trust Principles.

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