The US Department of Defense has signed a $120 million contract with Australian company Lynas Rare Earths to build the country’s first commercial-scale onshore rare earths separation plant, as part of a US government push on China’s dominance in critical mineral supply chains.
Rare earth elements are critical in low-carbon technologies such as electric vehicles and wind turbines, as well as in military equipment and consumer electronics. According to the International Energy Agency, China is responsible for nearly 90 percent of the world’s rare earth refining.
Under the deal with Lynas, China would be completely bypassed. Lynas, the world’s largest producer of rare earths outside of China, will export rare earth carbonate refined in Australia to the US, where it will be further processed for commercial purposes.
The plant, which expands on a pilot project started in 2020, will be the first commercial-scale rare earths plant within US borders. It will meet some of the goals set out in a strategic review on building supply chains and local manufacturing industries in semiconductors, batteries, critical minerals and pharmaceuticals released by President Joe Biden’s administration last June.
The Defense Ministry, which led work on critical minerals for the review, warned that China’s dominance of the industry poses geopolitical, supply chain and environmental, social and governance risks.
“The concentration of global supply chains for strategic and critical materials in China poses risks of disruption and politicized trade practices, including the use of forced labor,” the department said at the time.
The $120 million will cover the full cost of building the facility, which is expected to be built in Texas and operational by 2025, Lynas said. It added that using ore mined and refined in Australia would answer some of the Department’s environmental, social and governance concerns.