=Pentagon awards Australian rare earths miner Lynas $US120m contract to build plant in Texas

Australian mining company Lynas Rare Earths has been awarded a contract by the United States Department of Defence worth $US120 million to build a processing facility in the US.

Key points:

ASX-listed Lynas Rare Earths is the world's only significant miner of rare earths outside China

Rare earths are a group of 15 elements on the periodic table which have strategic uses, including in the defence, space and energy industries

Lynas is also building a new refinery in Kalgoorlie that will create about 120 operational roles

The facility is expected to be built on the Gulf Coast in the state of Texas and should by operational by 2025.

It will reduce America's reliance on China for strategic minerals used to make missiles and other high-tech equipment.

Lynas operates the Mt Weld rare earths mine in Western Australia's northern Goldfields and is building a $500m refinery in Kalgoorlie-Boulder that is due to begin production next year.

The ASX-listed company, which counts the Japanese government among its biggest backers, ships rare earths to its processing facility in Malaysia, but the new deal means WA minerals will also be headed for the US.

Lynas originally struck a deal with the Pentagon in July 2020 to progress plans for the facility.

A man and a woman wearing hard hats and high-vis workwear on a construction site.

Lynas managing director Amanda Lacaze says the deal demonstrates the priority that the US is placing on "ensuring that supply chains for these critical materials are resilient and environmentally responsible".

"The development of a US heavy rare earths separation facility is an important part of our accelerated growth plan," she said in a statement.

"We look forward to not only meeting the rare earth needs of the US government, but also reinvigorating the local rare earths market."

It is unclear whether the Texas plant will affect Lynas' pre-existing supply agreements with Japan, which has priority supply rights until 2038, according to the company's last annual report.

Lynas has financing facilities in place with a group known as Japan Australia Rare Earths (JARE), a joint venture that is part-owned by the Japanese government.

The principal amount of the JARE loan facility was US$145 million at June 30 last year, according to Lynas's annual report, with an interest rate of 2.5 per cent and a maturity date of June 30, 2030.

https://www.abc.net.au/news/2022-06-14/pentagon-strikes-deal-with-australian-rare-earths-miner/101149868