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Lynas awarded $120m DOD contract to build commercial heavy rare earths facility in US

Rare earth production line at Lynas’ plant in Kuantan, Malaysia. (Image taken from Lynas’ presentation.)

Australia’s Lynas Rare Earths (ASX: LYC) announced Monday that it has signed a follow-on contract for approximately $120 million with the US Department of Defense to establish a first of its kind commercial heavy rare earths (HRE) separation facility in the United States. The contract enables Lynas to establish an operating footprint in the US, including the production of separated heavy rare earth products.

Lynas is presently processing rare earths at its $800 million Lynas Advance Materials Plant (LAMP) in Kuantan, Malaysia.

The US industry will secure access to domestically produced heavy rare earths, which cannot be sourced today and are essential to the development of a supply chain for future facing industries including electric vehicles, wind turbines and electronics.

Lynas worked with the DoD on the Phase 1 contract for a US-based heavy rare earths separation facility, announced July 2020, and said it has now reached agreement for a full-scale commercial HRE facility.

Lynas plans to co-locate the heavy rare earths separation facility with the proposed light rare earths separation facility, which is sponsored and half funded by the US DoD Title III, Defense Production Act office.

The facility is expected to be located within an existing industrial area on the Gulf Coast of the state of Texas and targeted to be operational in financial year 2025.

Feedstock for the facility will be a mixed rare earths carbonate produced from material sourced at the Lynas mine in Mt Weld, Western Australia. Lynas will also work with potential third-party providers to source other suitable feedstocks as they become available.

“The development of a US heavy rare earths separation facility is an important part of our accelerated growth plan, and we look forward to not only meeting the rare earth needs of the US government but also reinvigorating the local rare earths market,” Lynas CEO Amanda Lacaze said in the media statement.

“This includes working to develop the rare earths supply chain and value added activities.”

“The DoD’s decision to fully fund the construction of the heavy rare earths facility demonstrates the priority that the US government is placing on ensuring that supply chains for these critical materials are resilient and environmentally responsible.”