The US Department of Defense has signed a $120 million deal with Australia’s Lynas Rare Earths to build the country’s first commercial-scale rare earths separation facility, as part of a US government campaign aimed at ending China’s dominance of critical mineral supply chains.
Rare-earth elements are essential in low-carbon technologies such as electric vehicles and wind turbines, as well as military equipment and consumer electronics. China is responsible for almost 90% of the world’s refining of rare earths, according to the International Energy Agency.
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 United States, where it will then be processed for commercial purposes.
The facility, which expands a pilot project launched in 2020, will be the first commercial-scale rare earths plant within U.S. borders. It will achieve 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 last June by the President’s administration. Joe Biden.
The Defense Department, which led the work on critical minerals for the review, warned that the dominance of Chinese industry carries geopolitical, supply chain and environmental, social and governance risks.
“The concentration of global supply chains for strategic and critical materials in China creates the risk of disruption and politicized business practices, including the use of forced labor,” the department said at the time.
The $120 million will cover the full cost of building the plant, which is expected to be built in Texas and be operational by 2025, Lynas said. He added that using ore mined and refined in Australia would address some of the department’s environmental, social and governance concerns.