Lynas Rare Earths Lines Up $96 Million Supply Deal With Pentagon -- Update

By Rhiannon Hoyle

"Lynas Rare Earths has reached a preliminary agreement with the Pentagon on a US$96 million, four-year supply deal that includes a floor price for some key rare earths used in fighter jets, missile systems and other defense technologies.

Australia's Lynas said the binding letter of intent with the U.S. Defense Department creates a framework for a definitive supply agreement following months of negotiations, as the U.S. seeks to shore up supplies of the critical minerals that are today mostly produced in China.

The Trump administration wants to reduce U.S. reliance on Chinese supply after Beijing announced restrictions on exports that particularly target companies with ties to the U.S. military. Last year, the Pentagon struck a deal with Lynas's American peer, MP Materials, designed to build out a U.S. supply chain for rare-earth magnets.

Lynas said its planned supply agreement with the Pentagon will help "support U.S. national security and supply chain resilience objectives." In an interview last month, Lynas Chief Executive Amanda Lacaze had said she hoped to ink a supply deal with U.S. defense officials before she steps down at the end of June.

Under the agreement, the Defense Department will spend roughly US$96 million buying light and heavy rare-earth oxides from Lynas, the Australian miner said Monday. The products will be supplied by Lynas over a four-year period.

The deal includes a floor price for neodymium-praseodymium oxide, a key building block of high-performance magnets, of US$110 a kilogram. That is in line with a floor price guaranteed by the Pentagon to MP Materials last year.

Lynas said it continues to discuss further supply arrangements with the Defense Department, including for heavy rare earth oxides.

Lynas has been separating so-called light rare earths neodymium and praseodymium at a plant in Malaysia since 2013. Last year, it produced the first separated heavy rare earths available commercially outside of China in decades and raised capital to expand its operations.

The U.S. agreement comes less than a week after Lynas announced a revised supply deal with Japan's state-run Japan Organization for Metals and Energy Security and the trading house Sojitz, which included the same floor price for neodymium-praseodymium supply.

In that deal, Lynas said the Japanese joint venture committed to buying half of all the heavy rare-earth oxides Lynas produces, and that the miner will make 75% of its heavy rare-earth volumes available to Japanese industry."