Lynas signs US$96m rare earth supply deal with Pentagon

 

Lynas, the largest rare earth refiner outside of China, has signed a binding letter of intent with the US Department of Defense to finalise an agreement to supply the country’s defence sector with rare earth minerals for four years.

“Through this agreement, the US defence industrial base will continue to have access to light and heavy rare earth oxides that are essential for modern manufacturing,” its CEO and managing director, Amanda Lacaze, said in a statement from the company today.

Lynas said the letter of intent establishes a framework to finalise an agreement for the supply of light and heavy rare earth oxides to support US national security and supply chain resilience objectives.

Under this arrangement, the Department of Defense will set aside about US$96 million (RM377.62 million) to purchase rare earth oxides from Lynas.

Lynas said the agreement followed a mutual decision with the Pentagon to modify an earlier agreement, due to “significant uncertainty” on whether plans to build a heavy rare earth processing facility in Seadrif, Texas, would proceed.

The statement also mentions that neodymium-praseodymium (NdPr) oxides will have a floor price of US$110 per kg under the arrangement.

For comparison, its benchmark price generally hovered around US$60 to US$80 per kg last year, though it briefly reached as high as US$128 per kg this year.

Market dominated by China

The mineral is a crucial raw ingredient for making powerful magnets needed for electric motors, actuators, and other applications.

Bloomberg Intelligence reported on March 2 that China dominates 90 percent of the world’s NdPr supply, but upcoming supplies from Australia and the US are likely to slash China’s market share to 69 percent by 2030.

Lynas mines rare earth minerals from Mt Weld, West Australia, processes them, and then ships them for refining and separation into rare earth oxides at the Lynas Advanced Materials Plant in Gebeng, Pahang.

The facility in Gebeng is not only capable of producing light rare earth elements, but is also the only significant producer of heavy rare earth elements outside China, and therefore the only producer not subject to China’s export controls on critical minerals.

10-year licence extension, with strings attached

However, the facility has faced significant opposition from environmental activists, particularly for issues surrounding the disposal of radioactive residue from its water leach purification (WLP) process.

The Malaysian government granted the facility a 10-year extension of its licence beginning March 3, but on the condition that it reduces the radioactivity of the WLP residue below regulatory limits by extracting the radioactive element thorium from the waste.

Moving forward, Lynas will also be required to complete the thorium extraction process in Australia before shipping it for further processing in Malaysia. - Mkini