Updates to include estimated size of award and second tender winner MP Materials, adds context throughout
Australian rare earth producer Lynas and US producer MP Materials have signed contracts with the US Department of Defense (DoD) to carry out design and engineering work for two US heavy rare earth separation plants.
The conclusion of the contracts was delayed by several months by political wrangling in the US but the DoD project now appears to be back on track. The size of the award for phase one design work is estimated at $1mn-5mn. The US at present has no commercial capacity to separate rare earths or large-scale commercial capacity to manufacture rare earth magnets, which are critical to defence, automotive, electronics and manufacturing.
Lynas is the only large rare earth producer outside China and supplies up to a fifth of global demand for light rare earth magnetic material neodymium and praseodymium oxide from ore mined at its Mount Weld deposit in Australia and separated at its processing plant in Malaysia.
MP Materials owns and operates the only producing rare earth mine in the US, Mountain Pass and currently produces a light rare earth concentrate that is marketed to China. MP is investing heavily in the development of processing capacity and is preparing to list on the New York stock exchange.
The amount of funding committed is small, but the project marks a key departure in terms of direct US government action on supply chain issues. The US initiative on rare earths goes back several years. President Donald Trump last year signed documents that freed up funds under the US Defence Production Act to develop US capacity to separate and process heavy rare earths, light rare earths, the production of neodymium-iron-born NdFeB magnets, samarium-cobalt magnets and rare earth metals and alloys.
Lynas will utilise its in-house intellectual property and track record in rare earths separation for the design work. Lynas entered an initial agreement with US rare earth technology firm Blue Line in May 2019 for a joint venture to develop rare earths separation capacity in the US, aiming to fill a gap in the US supply chain.
