Pentagon Partners Lynas to Break China's Rare Earths Stranglehold

Lynas and the Pentagon have signed off on a contract for work toward the rare earths separation plant, which the company intends to build in partnership with Texas-based Blue Line Corporation. The plant, which analysts expect to cost about $US50 million, is expected to break China’s stranglehold on the commercial-scale separation of heavy rare earth materials that are essential in military applications.

The plant will separate heavy rare concentrate produced via Lynas' Mount Weld mine in Western Australia and its light rare earth separation facilities in Malaysia. The company said the phase one funding from the US Department of Defense (DoD) would be put towards a detailed market and strategy study plus detailed planning and design work for the heavy rare earth separation plant. It expects the work to be completed in this financial year.

Yahoo Finance's quotation shows that Lynas's Australian-listed shares have risen 12.44% to 2.44 Australian dollars, setting a new intraday high since January 21. Reuters reported that it has signed a contract with the Pentagon to build a heavy rare earth separation plant in cooperation with the Texas manufacturer Blue Line Corporation.

The company's CEO Amanda Lacaze pointed out in the statement that heavy rare earths are the key element in high-efficiency magnets used in motors. The company possesses raw materials, intellectual property rights and successful experience, and can quickly build a heavy rare earth plant in a low-risk manner.

Rare earths are an indispensable strategic raw material for high-tech equipment such as missiles and mobile phones. China is the world's largest supplier of rare earth metals. Lynas is the world's biggest non-China producer of light rare earth metals. It sells heavy rare earth concentrate to China, including to the major separation plant.

Pentagon funding for the plant came under threat in May when it faced a backlash from a powerful group of Republican Senators who raised concerns about large parts of the company's supply chain being based in Australia and Malaysia.

The Texas plant will process the heavy rare earths mined from the Mt Weld rare earth mine in Lynas Western Australia. In the future, it will become the only plant outside of China that can separate heavy rare earths. According to the U.S. Geological Survey, 80% of the rare earth metals imported by the United States originate from China.

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