Australia's Lynas wins funding for U.S. heavy rare earths facility

(Reuters) - Lynas Corp said on Wednesday the U.S. military will give it initial funding for a heavy rare earths separation facility in Texas as part of Washington’s push to secure domestic supply of the essential minerals that China currently dominates.

Australia-based Lynas said it and its joint venture partner Blue Line will receive ‘Phase 1’ funding from the U.S. Department of Defense for planning work for the construction of the facility.

It did not say how much funding they will get, nor did it list any conditions associated with it.

The Lynas-Blue Line project will involve processing of so-called heavy rare earths, a less-common type of the specialized minerals. Lynas aims to ship rare earths from its mine in Western Australia for final processing at the Texas facility.

Once the planning work is complete, Lynas said it will be subject to another evaluation by the U.S. military before receiving any further funding to build the facility. Such funding is not necessarily guaranteed, Lynas said.

Analysts had expected Lynas to be selected for initial heavy rare earths funding because of its market experience. Lynas is the largest producer of rare earths outside China.

The United States is actively looking to reduce its reliance on other countries for the supply of the essential elements which have gained prominence after the U.S.-China trade war last year fueled worries that Beijing may use its dominance to restrict supply.

Lynas also did not mention any deadlines for the project nor the volumes it may be required to produce. The statement was released by the Australian Securities Exchange after market hours.

“Today’s announcement creates the foundation for a facility in the U.S. that will assist the U.S. to avoid the supply chain vulnerability that has been exposed over the past year,” Lynas Chief Executive Amanda Lacaze said in the statement.

She added Lynas was confident it would be able to meet the conditions set by the U.S. Department of Defense.

Reporting by Nikhil Kurian Nainan in Bengaluru and Ernest Scheyder in Houston; Editing by Muralikumar Anantharaman and Bernadette Baum