US Government Funds Rare-Earth Metal Processing Plant

A Partnership with Australia-Based Lynas Corp.

The US Department of Defense and Lynas Corp. (LYC:AU), an Australia-based mining company, have partnered to build a rare-earth element processing facility in Texas.

Lawmakers decided to contribute $36 million for the initial phase of building the plant after some disagreement. In April, plans to fund the project were put on hold because members of Congress argued that only US-based companies should receive government funding—but eventually a deal was reached at the start of this week. Lynas shares rose 11% on the news.

Rare-earth metals are important for building strong magnets used in high-tech products—everything from smartphones, to electric vehicles, to missiles. Lynas’ mine in Western Australia will ship these materials to Texas for processing.

Bringing Rare-Earth Metal Processing Closer to Home

The US government is making plans for three new domestic rare-earth processing plants, including the Lynas facility. When these projects are completed, the US will have the capability to process about 10,000 tons of rare-earth metals.

This amount of rare-earth metals would not meet the nation’s commercial needs. However, it would provide the US military with all the rare-earth metals it requires.

Reducing Dependence on China

China currently supplies about 80% of the rare-earth metals used in the US. At the moment, the US has no domestic rare-earth processing plants.

Last month, China threatened to impose sanctions on Lockheed Martin, a US-based arms supplier. This sounded alarm bells for lawmakers, who worried that China could use its control of rare-earth metal supply chains to put pressure on arms makers in the US. Through the new partnership with Lynas, the US government hopes to become less dependent on China for crucial rare-earth materials.

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