Pentagon halts rare earths funding for Lynas, MP Materials – document, sources

HOUSTON: The US Department of Defence has reversed its decision to fund two projects to process rare earth minerals for military weapons, one of which has controversial ties to China and the other with a plant in Malaysia, according to three sources and a government document seen by Reuters.

Australia’s Lynas Corp – whose plant is in Gebeng, Pahang – and privately held US firm MP Materials both said on April 22 they had been awarded funding by the Pentagon for rare earths separation facilities in California and Texas.

The Pentagon decision is a step backward for President Donald Trump’s plan to redevelop the US rare earths supply chain and reduce reliance on China, the world’s largest producer of the strategic minerals used to build a range of weapons.

It was reported day that a Chinese company’s minority stake in MP Materials, which owns the only US rare earths mine, has prompted concerns from scientists at the US Department of Energy.

Later, US Senator Ted Cruz and five other senators sent a letter to the Pentagon pushing it to only fund US rare earth projects. On April 29, the Pentagon informed applicants that the decision had been “put on hold until further research can be conducted,” according to a document.

The US military office overseeing the award said it is still under active solicitation and declined further comment. The Pentagon’s headquarters did not respond to requests for comment. In response to a request for comment, Lynas confirmed the Pentagon’s move in a statement on Friday.

MP Materials did not respond to requests for comment. The Pentagon award was designed to support processing of so-called heavy rare earths, a less-common type of the minerals used extensively in weapons.

The mines owned by Lynas in Australia and MP Materials in California have only minor concentrations of heavy rare earths, according to US Geological Survey data, prompting some controversy when the two companies last month said they were chosen.

US Senator Mike Enzi, a vocal supporter of a rare earths project in his home state of Wyoming being developed by Rare Element Resources Ltd and who signed the senators’ April letter, said he would prefer Pentagon funding go to US mines that support a new US rare earth supply chain.

Lynas, the largest producer of rare earths outside China, aims to ship rare earths from its mine in Western Australia for final processing at the Texas facility.

It was reported the Pentagon is also reviewing applications for other rare earth-related funding projects. Applicants have said they expect decisions in the coming months.

The amount awarded was not published by the US government, though industry sources have said it was at most US$400,000 (RM1.75 mil) each for planning work for the construction of a facility to process the minerals.

Lynas said it would move forward on its project. It was not immediately clear if MP Materials plans to move forward on design work for its project. – May 22, 2020, Reuters

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