Australia's Lynas plans new processing facility in the U.S.

Rare earth oxides praseodymium and neodymium are pictured in the final stage of production at Lynas' Advanced Materials Plant in Gebeng, Malaysia July 3, 2014. Australia's Lynas Corp, one of only two rare earths producers outside China, expects to reach its initial output rate target by December at the latest which should shore up its shaky cash position, new CEO Amanda Lacaze said in her first interview on Wednesday. To match LYNAS-RAREEARTHS/ REUTERS/Sonali Paul (MALAYSIA - Tags: BUSINESS INDUSTRIAL COMMODITIES)

(Reuters) - Rare earths producer Lynas Corp said on Monday it has signed a memorandum of understanding with Texas-based Blue Line Corp to set up a rare earths separation facility in the United States.

Lynas’ move into the United States follows ongoing regulatory issues at its processing plant in Malaysia. The southeast Asian nation has told Lynas to remove years of accumulated waste at the plant in order to have its license renewed.

Lynas and Blue Line will cooperate over the next year to develop the processing facility in Texas. The venture will be majority owned by Lynas, the companies said in a joint statement.

The venture would allow Lynas to close a “critical” supply chain gap for U.S. manufacturers, the company said. Lynas had earlier indicated that it was considering building new processing facilities, given the situation in Malaysia.

Lynas is the world’s only major producer of rare earth minerals outside China. The materials produced by the company, such as neodymium-praseodymium, are used in a variety of applications such as electrical components and high-power magnets.

It did not give any details on the cost of the proposed U.S. facility.

Lynas is currently the target of a $1.1 billion takeover offer from retail-to-chemicals conglomerate Wesfarmers Ltd, which it has rejected as undervaluing its business.

The company last month reported a near 33% rise in its third-quarter production of rare earth oxides.

Reporting by Ambar Warrick in Bengaluru; Editing by Richard Pullin