Lynas Rare Earths Secures $137 Million DoD Supply Agreement, Bolstering U.S. Rare Earths Capabilities
The Australian company Lynas Rare Earths has signed a Letter of Intent with the U.S. Department of Defense (DoD) for a supply agreement valued at approximately $137 million AUD (US$96 million). This agreement aims to enhance the United States' rare earth minerals capabilities and diversify its supply chain.
Agreement Details
Under the deal, the U.S. will purchase light and heavy rare earth oxide products. The agreement establishes a floor price of US$110 per kilogram for these minerals over the next four years. Lynas stated that these products are essential for supporting U.S. national security and supply chain resilience objectives. The agreed price of US$110/kg exceeds Lynas' average prices received in 2024 and 2025 for some light rare earth minerals.
Amanda Lacaze, Managing Director of Lynas, stated that the agreement strengthens the company's relationship with the U.S. government and ensures the U.S. defense industrial base has access to essential materials for manufacturing.
Texas Refinery Project
Discussions continue between Lynas and the U.S. government regarding the construction of a rare earth minerals refinery in Texas. Despite a U.S. grant of US$258 million for the project, Lynas indicated "significant uncertainty" about whether the facility, intended to produce 2,500 to 3,000 tonnes of heavy rare earth products annually, would proceed.
Geopolitical Context
These efforts by Western nations to bolster rare earths supply come as China holds over 80% of global rare earths processing capability and accounts for 70% of rare earths mining. Lynas, through its Malaysian plant, has increased the supply of terbium and dysprosium, critical metals for military and green energy technologies. In October, Australia and the U.S. signed a separate $13 billion deal to further develop the rare earths sector and reduce reliance on existing dominant suppliers.
Following the announcement, Lynas shares increased by 0.9% on Monday.