Australian rare earths miner Lynas Corp.'s (ASX: LYC) shares jumped on Friday after it announced a deal with the U.S. government to build a commercial light rare earths separation plant in Texas.
The facility, expected to produce about 5,000 tonnes of rare earths a year, would help Washington's push to secure domestic supply of essential minerals used in magnets and motors that power phones, wind turbines, electric vehicles and military devices.
It would house processing facilities for both heavy and light rare earth elements, directly sourced from Lynas' cracking and leaching plant under development in Kalgoorlie, Western Australia.
China currently accounts for 70% of global production of rare earths, controlling 90% of the US$4 billion global market.
Lynas, the only major rare earths producer outside China, said both the company and the U.S. Department of Defense could potentially contribute about US$30 million each to the geopolitically generated venture.
Details of the funding for the project, which Lynas is developing with joint venture partner Blue Line, were not disclosed. They are said to be in the works.
"This agreement is consistent with the U.S. Government's commitment to rebuild the domestic industrial base, while working effectively with partner nations," CEO Amanda Lacaze, said in a news release.
The company did not provide a time frame for building the plant, but told investors its construction was part of its Lynas 2025 plan.
Lynas shares soared on the news, closing 13.7% higher at A$5.56. That lifts the company's value to A$5 billion (about US$3.9 billion). The stock is now up more than 400% from its lows last year when Covid-triggered panic selling rocked global markets.
Despite their name, the 17 minerals grouped under the rare earth elements label are not rare. According to the U.S. Geological Survey (USGS), they are roughly as common as copper. But, because rare earth ores oxidize quickly, extracting them is difficult and extremely polluting.
Critical minerals were a focus of the Trump administration. The White House signed agreements with Canada and Australia, among other nations, to secure supply of such elements.
Late last year, Washington inked an aid and spending package, which included more than US$800 million to fund rare earth and strategic minerals research.
The US$2.3 trillion, 5,593-page bill, essentially codified Trump's previous executive orders to boost production of critical elements.
President Joe Biden is expected to boost domestic production of specialized minerals even further.
The U.S. is not alone in its quest to reduce reliance on foreign producers. The European Union has stepped up its efforts to become less dependent on imported raw materials, a list that now includes lithium.