Australian rare earth producer Lynas Corp announced on Monday that it has earned a major contract with the US Department of Defense to start the initial design work for a facility to separate heavy rare earths. The facility will come up in Texas and the initial phase of funding is being done by the Pentagon.

Lynas Corp is the largest rare earth producer outside China and expects to complete the initial phase of the project in a year's time. Needless to say, the move by the US Department of Defense to involve the Kuntan-based Lynas is in a bid to reduce its reliance on China, which has been a leader in this space.

US Takes Australia's Help

Lynas Corp
Lynas Corp aims to complete the planning and designing work of the Texas facility by fiscal 2021 YouTube Grab

Lynas, which is the key source of rare earths outside China, secured a "Phase 1" funding from the US Department of Defense to partner with Texas-based Blue Line Corp to conduct studies and finalize a design for a planned heavy rare earths separation facility. The company said in a statement that it aims to complete the planning and designing work by fiscal 2021.

"Lynas has the feedstock, intellectual property and track record to deliver a heavy rare earths facility in a timely and low risk manner," Chief Executive Officer Amanda Lacaze said in the statement. Lynas produces around 13 percent of the world's total supply of rare earth elements that are used in military defense systems and consumer electronics. Besides, rare earth elements are also used in high-strength permanent magnets integral to electric vehicle motors and wind power generators.

China is a market leader in rare earth elements accounting for 80 percent of the total global supply. Lynas, however, has emerged as one of the biggest rivals of Chinese firms lately. The company has a mining and concentration plant at Mount Weld in Western Australia and a refining facility in Kuantan in Malaysia.

US Severing Ties with China

Lynas Plant
Lynas produces around 13 percent of the world’s total supply of rare earth elements that are used in military defense systems and consumer electronics YouTube Grab

The announcement comes amid growing tensions between Washington D.C. and Beijing and is a consorted effort to reduce its dependency on China. Pentagon's funding push also follows President Donald Trump's order in 2017 to reduce dependency on China for import of critical minerals that are involved in developing missile systems, electric vehicles and consumer technology.

China so long has been supplying around 80 percent of America's rare earth imports, according to the US Geological Survey. However, that may now gradually reduce given the major moves US is making to shun trade ties with China over growing tensions. Presently, the United States doesn't have a rare earths processing plant of its own and is in the process of developing three, including the one with Lynas.

Although the initial cost of planning and designing the facility is still not known, a Bloomberg report in May said that the project would likely cost $30 million. Once the three planned rare earths plants come up in the United States, they will be able to add around 10,000 tons of processing capacity. That though is less than the country's total requirement but will be sufficient to meet the military needs.