Lynas wins US military tender as America moves to rebuild rare earth industry

Lynas Corp (ASX: LYC) has been told by the US Department of Defence (DoD) it has won a contract to help design a new heavy rare earths (HREE) separation plant after making a submission in December last year.

No details of the funding amount or the size of the project have been released, but Lynas is working with a Texan company, Blue Line, on the project, with the plant expected to be built in that state.

A key element in rare earth mining is the separating of the various rare earths contained together in ore.

There are no HREE separation plants outside China, and the US is anxious to rebuild its rare earth processing industry to escape its dependence on China.

The only US producing rare earth mine, Mountain Pass in California, has been sending its ore to China for processing.

Reuters reported this week that government scientists have been ordered not to work with the mine’s operators because of their ties to China.

Several other North American miners have advanced rare earth projects which could use the proposed HREE plant.

Lynas chief executive Amanda Lacaze said she was delighted by the tender contract news.

“Today’s announcement creates the foundation for a facility in the US that will assist the US to avoid the supply chain vulnerability that has been exposed over the past year,” she added.

Increasing concerns about HREE future supply

The definition of HREE includes nine of the 17 rare earth elements: terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium and yttrium.

While some of the light rare earths — lanthanum and cerium in particular — have been readily available (and much cheaper than the key heavy elements) and even sometimes in surplus, there have been fears that China is facing serious declines in its HREE resources.

Recently one of the leading American rare earth experts, Jack Lifton said the US had three mine projects ready to go — but no supply chain to handle the ore after it was mined.

Mr Lifton, who heads the Industrial Policy Institute which advises governments on critical materials, earlier this year welcomed the DoD plan for a separation plant.

“This is the biggest move in this connection by the US Government — ever.

“They’ve finally figured it out,” he added.

Now, said Mr Lifton, the US would restore its own supply chain for these critical metals.

US was once world leader

In the 1980s, the US was the world’s biggest supplier of rare earths both to itself and to the world.

But by the first decade of the 21st century, the downstream industries were disappearing.

Magnequench, owned by General Motors, had a global monopoly on producing bonded rare earth magnet alloys in Indiana.

In 1995 two Chinese companies bought 65% of Magnequench. Those companies were run by relatives of then former Chinese leader Deng Xiaopeng.

By 2004 Magnequench closed its plant in Indiana and moved all operations to China.

A rare earths magnet manufacturer owned by a German company shuttered its plant in Kentucky in 2003 and operations were shifted to Slovakia.

Hitachi stopped processing rare earths in Michigan in 2005.