Lynas wins more US funding for new rare earths plant
Lynas Rare Earths has won $US120m ($172m) in funding from the US Department of Defence to build a heavy rare earth separation plant in the US.
Lynas Rare Earths has won a second round of funding for a US rare earths facility from the Department of Defence, cementing its role as the first major domestic provider of the strategic minerals to US industry.
Lynas said on Tuesday it had won $US120m ($172m) in funding from the US Department of Defence to build a heavy rare earth separation plant – which will produce separated minerals such as terbium and dysprosium for US strategic reserves and local hi-tech manufacturers.
The US DoD funding is the latest in a series of efforts from Western governments to reduce reliance on Chinese sources of critical minerals, and comes amid intensifying competition from Chinese state-owned companies over access to raw materials in Africa and other parts of the developing world.
Lynas’s Malaysian refinery is the only rare earths separation plant outside China, which dominates global supply of the group of metals, key ingredients needed in the manufacture of electric vehicles, wind turbines and hi-tech weaponry such as drones and guided missiles.
The ASX-listed company had already won about $US30m in funding to help build a light rare earths manufacturing plant in the US in January last year.
In April the US Department of Energy conditionally offered to extend a $US107m loan to ASX-listed Syrah Resources to help secure the construction of a battery-grade graphite plant in the US – another move aimed at offering US industry an alternative to China’s stranglehold on supply of critical minerals.
As with rare earths, China controls about 85 per cent of the supply of the world’s battery-grade graphite.
The Australian government has also shown its willingness to pump cash into offering up an alternative to China’s dominance of raw materials supply, granting would-be Lynas competitor Iluka Resources a cheap $1.25bn loan – about 60 per cent of the government’s Critical Minerals Facility – to fund construction of a rare earth separation plant in Western Australia.
Although Lynas is still to settle on a location for its proposed US facilities, the company says it will look to co-locate both the heavy and light rare earth separation facilities in the one place, likely to be an existing manufacturing zone in Texas.
Lynas says the funding from the US DoD should be enough to fully fund construction of the heavy rare earth plant, although the company has not yet released any details of the construction costs nor the expected commercial outcomes from the facility.
The company’s Mt Weld mine in WA will initially supply the raw materials for the refinery, but Lynas said it could consider alternative sources of feedstock in the future.
Lynas chief executive Amanda Lacaze said the decision was the product of years of work by the company in the US. “The US government’s selection of Lynas for this strategic contract reflects our proven track record in rare earths production,” she said.
“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.”
Lynas shares fell 4c to $8.53 on Tuesday, amid a wider market rout that saw other mining stocks take heavy falls.