Pentagon in talks with Australia on rare earths plant: official

(Reuters) - The U.S. Department of Defense is in talks with Australia to host a facility that would process rare earth minerals, part of an effort to reduce reliance on China for the specialized materials used in military equipment, a senior American official said.

FILE PHOTO: Jars containing rare earth minerals produced by Australia's Lynas Corp from its Mount Weld operations are seen near Laverton, northeast of Perth, Australia, August 23, 2019. REUTERS/Melanie Burton

The push comes as China threatens to curb exports to the United States of rare earths, a group of 17 minerals found in fighter jets, tanks and high-tech consumer electronics.

China is the world’s largest processor and producer of the minerals accounting for more than 80 percent of global processing capacity.

“We’re concerned about any fragility in the supply chain and especially where an adversary controls the supply,” Ellen Lord, the Pentagon’s under secretary of defense for acquisition and sustainment, told reporters at a Washington event on Monday.

Lord said the Pentagon is looking at several options to partner on rare earth processing facilities, adding “one of the highest potential avenues is to work with Australia.”

Australian Department of Defence officials said that cooperation on critical minerals that had begun in 2018 was ongoing.

“Continuity and guarantee of supply of rare earths and critical minerals is vital to a range of sectors, including defense. Cooperation with international partners is integral to this effort,” a Defence spokeswoman told Reuters.

The Pentagon update came after the U.S. said earlier this year that it would look to Australia and Canada to develop rare earths reserves around the world to reduce the global reliance on China. It has also held talks with rare earths projects across Africa.

Lord said she has held several talks with Australian officials this year about whether such a plant could supply the Pentagon’s needs.

U.S. President Donald Trump last month ordered the Pentagon to find better ways to procure a range of magnets made from rare earths, warning that the nation’s defense would suffer without adequate stockpiles.

Australia's Lynas Corp LYC.AX is the world's largest rare earths miner and processor outside of China and plans to have an initial processing plant up within the next four years as well as developing a plant in Texas.

Rare earth developers in Australia are edging closer to building plants. The country contains only 2.8% of the world’s rare earth reserves, but accounts for more than half of the new projects in the global pipeline.

Northern Minerals NTU.AX, which has built a demonstration plant at its Browns Range project in Western Australia, will be ready to decide on the final form and funding of a full scale plant in about a year, a spokesman told Reuters.

Rare earth minerals need to be processed after they are extracted from the ground. There is only one operational rare earths mine in the United States, though the country has no processing facilities.

California’s Mountain Pass mine is building a processor and hopes to have it online by next year.

Reporting by Ernest Scheyder and Bryan Pietsch. Additional reporting by Melanie Burton in MELBOURNE editing by Jonathan Oatis & Simon Cameron-Moore