(Corrects to "largest" from "only" processor in secondparagraph) By Praveen Menon and Riya Sharma June 14 (Reuters) - Australia's Lynas Rare Earths has signed a $120 million follow-on contract with the U.S.Department of Defense to build a commercial heavy rare earthsseparation facility in Texas, the firm said on Tuesday. Lynas is the world's largest processor of rare earthsoutside China, and the contract with its U.S. subsidiary buildson 'Phase 1' funding for a facility announced in July 2020.
The project, for which the Pentagon provided initialfunding, is expected to be built in an industrial area on theTexas Gulf Coast and be operational in financial year 2025, thecompany said. Lynas intends to combine the heavy rare earth separationplant with a light rare earth separation facility, which ishalf-funded by the Defense Production Act office of the U.S.Department of Defense. The plant would be the first outside China that is able toseparate heavy rare earths, Chief Executive Amanda Lacaze toldReuters in an interview.
"And that's why this is such an important step," she saidafter Tuesday's news. Lynas mines rare earths in Western Australia and ships thematerial to Malaysia in southeast Asia, where it produces rareearth oxides. The company's goal to boost output by 50% by 2025 would notbe sufficient to meet rising demand, Lacaze said, however. "The rapid growth in the market, particularly over the last12 months, tells us that we need to accelerate that plan," shesaid of the target the company set itself in 2019. After supplies were disrupted by the COVID-19 pandemic,interest from Western nations, Japan, the European Union andothers has grown as they recognised the risk of relying on Chinaas their sole source of supplies.
"The issue here is not whether it's Chinese or non-Chinese... it's simply that a singular supply chain is problematic,particularly in an area where you've got rapid growth and you'vegot a material which is critical for success," Lacaze said.
"We are certainly highly engaged with governments who areconcerned about supply chain security, and we'll continue to doso." (Reporting by Riya Sharma in Bengaluru; Editing by RichardPullin and Clarence Fernandez)
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