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Pentagon awards $30 million in rare earths funding to Australia's Lynas

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(Reuters) - The U.S. Department of Defense on Monday said it has awarded $30.4 million to Australia’s Lynas Rare Earths Ltd to build a Texas facility for processing specialized minerals used to make weapons, electronics and other goods.

China is the world’s largest producer of rare earth minerals and has threatened to stop their export to the United States, fueling a push inside the U.S. government to boost domestic production.

The Pentagon’s award will fund construction of a facility to process so-called light rare earths, the most-common type of rare earths, commonly found in consumer goods such as cellular phones.

Lynas Chief Executive Amanda Lacaze said the company was pleased to have been selected, adding the plant “will ensure the U.S. has a secure domestic source of high quality separated light rare earth materials.”

This is the second award Lynas has received from the Pentagon. Last year, the company and Texas-based Blue Line Corp received funding for production of so-called heavy rare earths, a less-common type of the minerals used in weaponry.

Both facilities are planned for Hondo, Texas, about 45 miles (72 km) west of San Antonio.

Lynas aims to ship rare earths from its mine in Western Australia for final processing in Texas.

The company said it will produce a quarter of the globe’s demand for rare earths when the facilities are operational.

MP Materials Corp, which last year also received Pentagon funding, is the only existing U.S. rare earths company, though it ships more than 50,000 tonnes of concentrated rare earths per year to China for final processing.

Reporting by Ernest Scheyder; Editing by Marguerita Choy and Bill Berkrot

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